This figure breaks down the types of goods that exist based on whether the supply is finite or infinite, and whether one must purchase the good in order to receive it.
Here are the relevant definitions:
- Excludability: the degree to which a good, service or resource can be limited to only paying customers, or conversely, the degree to which a supplier, producer or other managing body (e.g. a government) can prevent "free" consumption of a good.
- Exhaustive (also called "rivalrous"): a good is said to be rivalrous or a rival if its consumption by one consumer prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. A good is considered non-rivalrous or non-rival if, for any level of production, the cost of providing it to a marginal (additional) individual is zero.
A bit more on each:
Social Goods
- exhaustive
- exclusive
Examples:
- Education
- Libraries
- Housing
- Health Care
What Is a Social Good?
A social good is something that benefits the largest number of people in the largest possible way.
Some call these private goods since they can be private sector. People can make money offering them in the marketplace, to those who can afford to pay their full costs. The question is whether a society wants these to be made available to those who cannot afford them.
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Common-Pool Goods
- exhaustive
- non exclusive
Examples:
- Aquifers
- Fisheries
- Forests
- Groundwater
What Is a Common-Pool Resource?
A common-pool resource is a good that functions as a hybrid between a public and private good because it is shared and available to everyone but also scarce, with a finite supply. These open-access resources are susceptible to overexploitation and diminished availability if each individual pursues their own self-interest.
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Toll Goods (or club goods)
- non exhaustive (non rival)
- exclusive
Examples
- Broadcasting Airwaves
- National Parks
- Toll Roads
- Toll Bridges
Also called a club good.
What is a Toll Good?
. . . products that are excludable but non-rival. Thus, individuals can be prevented from consuming them, but their consumption does not reduce their availability to other individuals (at least until a point of overuse or congestion is reached). Club goods are sometimes also referred to as artificially scarce resources. They are often provided by natural monopolies. Examples of club goods include cable television, cinemas, wireless internet, toll roads, etc.
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Pure Public Goods
- non exhaustive
- non exclusive
Examples:
- Clean Air
- National Defense
- Pollution Abatement
- Street Lights
What is a pure public good?
a good that is both non-excludable and non-rivalrous. For such goods, users cannot be barred from accessing or using them for failing to pay for them. Also, use by one person neither prevents access of other people nor does it reduce availability to others. Therefore, the good can be used simultaneously by more than one person.
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For more:
- Legal Theory Blog: Legal Theory Lexicon: Public and Private Goods.
- PUBLIC, COMMON POOL, TOLL GOODS, AND THE MARKET.
- The Four Different Types of Goods.
- Lecture 8: Public Goods.
