ECON 001B Chapter Notes - Chapter 11: Free Rider Problem, Moe Williams, Excludability
Document Summary
The goods we"ve discussed so far are private goods. Now we will discuss 3 other types of goods: What separates these 4 types of goods are: Rivalry in consumptions one person"s use of a good diminishes other people"s use. Drink bottle of water, others can"t have that drink. Driving on the freeway takes away from other"s free flow. Excludability a person can be excluded from using the good. Rivalry yes, excludable yes = private goods. Rivalry yes, excludable no = common resources* Eg: fish in the ocean, the freeway. Rivalry no, excludable yes = club goods. Rivalry no, excludable no = public goods* Public goods often fall victim to the free rider problem, where an individual receives the benefits of the good without paying for it. Common resources suffer from tragedy of the commons a story that illustrates why common resources are used more than is desirable, from the standpoint of society as a whole.