What is Public Good ? скачать в хорошем качестве

What is Public Good ?

A public good is an item whose consumption is determined by society, not individual consumers. Examples include economic statistics, law enforcement, national defense, parks, sewer systems, and some radio and television broadcasts. Public goods are usually financed by taxes because they are created for the benefit of everyone. A public good’s consumption does not reduce its availability to others. Economists divide public goods into non-rivalrous and non-excludable categories. A fireworks show is non-excludable because the cost to keep those who won’t pay to watch it can be prohibitive. But that also demonstrates the free-rider problem. The free rider problem states that a rational person will not contribute to the maintenance or availability of a public good if they do not need to contribute to maintain its benefit. Non-rivalrous public goods may be consumed simultaneously by many without diminishing returns. In our fireworks show example, if the show charged an entrance fee but was still visible to people who chose not to attend, the free viewers’ watching is non-rivalrous. The show’s value isn’t diminished when they choose to watch it from afar. Read more: Copyright © Investopedia.com