Public Goods

A public good is both nonexcludable and nonrival in consumption.

A public good is the exact opposite of a private good: it is a good that is both nonexcludable and nonrival in consumption. A public sewer system is an example of a public good: you can’t keep a river clean without making it clean for everyone who lives near its banks, and my protection from great stinks does not come at my neighbor’s expense.

Here are some other examples of public goods:

Because these goods are nonexcludable, they suffer from the free-rider problem, so no private firm would be willing to produce them. And because they are nonrival in consumption, it would be inefficient to charge people for consuming them. As a result, society must find nonmarket methods for providing these goods.