Public And Private Goods, Natural Resources and Monopolies
multiple consumers cannot consume the same good
multiple consumers can consume the same good
consumption can be detected and prevented by producer

Private Goods

Efficiently produced and allocated by markets
  • agriculture, minerals, artifacts
  • labor, services
  • land parcels
  • rain and sunlight incident on land parcels
  • roads, bridges, tunnels (congested)

Club Goods ("Natural Monopoly")

High fixed costs, low marginal costs => inefficient competition
  • roads, bridges, tunnels (uncongested)
  • pipes: water, sewage, gas
  • wires: telecom, electricity
  • aggression deterrence (police/courts)
  • fire protection
consumption cannot be detected or prevented

Common Goods ("Natural Resources")

Tragedy of the commons, negative externalities => overconsumption
  • atmosphere, ozone layer, sky (cf. light pollution)
  • oceans, lakes, rivers, streams, groundwater, aquifers
    • both as water sources and as sinks for pollution/carbon/runoff/silt
  • fisheries, wild game, ecosystems
  • unenclosed timber and grazing land
  • underground oil/gas reservoirs; seabed minerals
  • electromagnetic spectrum; orbits

Public Goods

Free riders, positive externalities => underproduction
  • national defense
  • prevention of contagion, conflagration, flood
  • streets, parks (uncongested)
  • lighthouses, streetlights, radio/TV broadcasts, GPS, fireworks
  • knowledge, inventions, software, music, jokes, styles, designs, recipes
  • anti-poverty safety net (if most people favor charity)

Further Reading

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