ECON 001 Lecture Notes - Lecture 8: Overfishing
Chapter 11
I.Public Goods
●Some goods that have characteristics which make it impractical for private firms to
produce. For such goods, the government will provide these goods.
A. Characteristic of Public Goods
1. Non-rival
2. Non-excludable
A good is rival if one person’s use of a good decrease the quantity available (or quality) for
someone else.
(ex) steak at restaurant, two people cannot eat the same steak
Good is nonrival if one person’s use of it does not decrease the quantity available (or quality
of the good) for someone else
(ex) watching a football game on TV
A good is excludable if it is possible to prevent from somebody from enjoying the benefits if
the person did not pay
(ex) Universal Studios
Good is not excludable if it’s difficult or impossible to prevent someone from enjoying its
benefit if the person did not pay
(ex) sunset or walking at the beach
B. Providing Public Goods
●Nonrival and nonexcludable which makes it difficult for private firms to provide
public goods
(ex) what happens if US national defense is privatized? Firm can’t deny services for people
who don’t pay
Document Summary
Some goods that have characteristics which make it impractical for private firms to produce. For such goods, the government will provide these goods: characteristic of public goods, non-rival, non-excludable. A good is rival if one person"s use of a good decrease the quantity available (or quality) for someone else. (ex) steak at restaurant, two people cannot eat the same steak. Good is nonrival if one person"s use of it does not decrease the quantity available (or quality of the good) for someone else (ex) watching a football game on tv. A good is excludable if it is possible to prevent from somebody from enjoying the benefits if the person did not pay (ex) universal studios. Good is not excludable if it"s difficult or impossible to prevent someone from enjoying its benefit if the person did not pay (ex) sunset or walking at the beach: providing public goods. Firm can"t deny services for people who don"t pay public goods.
