PUBLIC GOODS

These are the goods that are characterized by the non rival consumption and which do not have the capacity to exclude the non tax payers. There are four types of goods, of which the public good forms a part. The other three would be the private goods, the common property and the near public goods. They have minor differences in each of them. Contact us now for Public Goods Homework Help

The public goods are those that do not have proper right for the property. They are actually owned by all. This works well as each and every member of the society can make use of it. There are no restrictions to be seen at all. These are goods that cannot be exchanged with any other good in the market. The best way to provide these goods is government. There is no other good way to provide these public goods.

Example:

There area number of examples that can be quoted. The best among them would be the national defense. In this case, there are also the non tax payers who are benefited from this. This can be felt when they are protecting all of us from the foreign attacks. They do not make you pay exclusively for it. All the public sectors fall under the public goods category.

The Free Rider Issue:

There is one issue that arises in case of the public goods. This would be the reason why it would be best on the part of the government to provide these goods for the public. This would be the problem of free riders. These public goods are provided to the public for free, but there is cost involved in the production of these goods too. There are not many people who would willingly pay if a good is given for free. Hence the government would need money to produce it. This is collected by the government through the taxes. When the usage of the free rider goods is seen, it has to be noted that not only the tax payers use it, but also the non tax payers are seen to use it. This way everyone gets a free ride. This is why the name was given.

In case the private sector tries to provide these goods which are already available for free to the people, then no one would want to buy it at a price. This is the reason why the good which is a public good is not produced by any other firm in the industry.

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