Public goods are valuable but markets will often undersupply these goods. As we have seen, “nonexcludability” and “nonrivalry” are important qualities of public goods, but nonexcludability is usually the more important problem. Nonrival but excludable goods such as cable TV or digital music can often be provided privately. Although there may be some inefficiency when nonpayers are excluded, private provision does allow for entrepreneurship and market discovery. When a good is nonexcludable, however, demanders don’t have an incentive to pay for the good and, as a result, suppliers don’t have an incentive to supply the good. That’s why, for instance, the world doesn’t have enough protection against an asteroid strike. The benefit of providing public goods is an argument for government taxation and supply.

A resource that is nonexcludable but rival will tend to be overused and under maintained. The tragedy of the commons explains many of the major environmental problems facing the world today. Sometimes there are creative solutions to the tragedy of the commons, such as instituting new property rights. Unfortunately, creating property rights is not automatic and may require extensive understanding of economic principles and agreement among many of the world’s governments.

In short, many of the world’s problems arise when property rights to goods are either not possible, not protected, or not easily implemented.