A good is nonexcludable if people who don’t pay cannot be easily prevented from using the good.
Jeans are different from asteroid deflection for two reasons. First, as we said, people are willing to pay for jeans because paying makes the difference between getting the jeans or not—nonpayers can be cheaply excluded or prevented from consuming jeans. But people aren’t willing to pay for asteroid deflection because paying makes no appreciable difference in how much asteroid deflection you consume—nonpayers cannot be excluded from consuming the benefits of asteroid deflection. When a person can cheaply be prevented from using a good, economists say the good is excludable. When a person cannot be cheaply prevented from using a good, economists say the good is nonexcludable. Jeans are excludable; asteroid deflection is nonexcludable.
The second reason why asteroid deflection is different from jeans is that when one person is wearing a pair of jeans, it’s not easy for a second person to wear the same jeans. But two people can enjoy the benefits of the same asteroid deflection. In fact, billions of people can enjoy the benefits of the same asteroid deflection. But don’t try fitting a billion people into the same pair of jeans!
A good is nonrival if one person’s use of the good does not reduce the ability of another person to use the same good.
When one person’s use of a good reduces the ability of another person to use the same good, economists say the good is rival. When one person’s use of a good does not reduce the ability of another person to use the same good, economists say the good is nonrival. Jeans are rival; asteroid deflection is nonrival.
These two factors, whether a good is excludable or nonexcludable and whether it is rival or nonrival, can be used to divide goods into four types, as in Table 19.1. We have already given an example of a private good, a good that is excludable and rival. Jeans are a private good; hamburgers and contact lenses are other familiar examples. We have also given one example of a public good, a good that is nonexcludable and nonrival. Asteroid deflection is nonexcludable and nonrival. National defense is another example. Let’s take a closer look at the differences between private and public goods and then we will examine the other two categories of goods, club goods and common resources.
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TABLE 19.1 Four Types of Goods
|
|
Excludable |
Nonexcludable |
|---|---|---|
|
Rival |
Private Goods Jeans Hamburgers Contact lenses |
Common Resources Tuna in the ocean The environment Public roads |
|
Nonrival |
Club Goods Cable TV Wi-Fi Digital music |
Public Goods Asteroid deflection National defense Mosquito control |