Public Good
A good that is non-excludable and non-rivalrous, meaning everyone can use it and one person's use does not reduce another's.
Also known as: Public goods, Pure public good
Category: Business & Economics
Tags: economics, cooperation, decision-making, incentives, businesses
Explanation
In economics, public goods are defined by two properties. Non-excludability means that once the good is provided, it is impractical or impossible to prevent anyone from benefiting. Non-rivalry means one person's consumption does not diminish what is available to others. Classic examples include national defense, clean air, public radio broadcasts, lighthouses, scientific knowledge, and herd immunity. These contrast with private goods (excludable and rivalrous, like food or clothing), club goods (excludable but non-rivalrous, like cable TV), and common-pool resources (non-excludable but rivalrous, like fish stocks). Public goods create a market failure: profit-driven private provision underproduces them because contributors cannot capture the benefits while non-contributors cannot be excluded. This produces the free-rider problem, where everyone hopes someone else will pay for the good, and the equilibrium is undersupply. Solutions include government provision funded by taxation, voluntary collective action, philanthropy, exclusion mechanisms that convert public goods into club goods, and matching schemes that subsidize contribution. Many digital goods - software, knowledge bases, encyclopedias - are non-rivalrous and weakly excludable, which is why open-source movements, Wikipedia, and creative commons licensing have been so consequential: they treat information as the public good it naturally is.
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