Excludability: the property of a good whereby a person can be prevented from using
Rivalry in consumption: the property of a good whereby one person’s use
diminishes other people’s use.
Private goods: goods that are both excludable and rival in consumption.
Ice cream cones, clothing, congested toll roads
Public goods: goods that are neither excludable nor rival in consumption.
Tornado siren, national defense, uncongested toll road.
Common resources: goods that are rival in consumption but not excludable.
Fish, congested toll road
Club goods: goods that are excludable but not rival in consumption.
Fire protection, cable TV
Free rider: a person who receives the benefit of a good but avoids paying for it.
Not excludable so they have a trouble selling the product (market failure)
Leads to them not supplying! So the government interferes and makes a tax on
everyone to pay for it and they get it for cheaper.
When the number of beneficiaries is large and excluding one is impossible
National defense: once a country is defended you can’t exclude anyone and you
enjoying the benefits doesn’t take away from others.
Basic research: creates knowledge
General knowledge is not excludable and joins the general pool
Specific technological, knowledge ca