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2. Public Goods

Public Goods are goods that are non-excludable and non-rivalrous, meaning they are available to everyone, and one person’s use does not reduce their availability to others.

Characteristics:

  • Non-excludability: Cannot prevent people from using the good.
  • Non-rivalry: One person’s use does not diminish another’s use.

Because public goods are non-profitable for private firms to provide, the government often steps in to supply them.


Real-Life Example:

Street lighting is a public good because it is available to all and one person’s use of the light does not reduce its availability for others. The government provides such services because private firms may not find it profitable.