Public Goods | A-Level Economics Notes
These revision notes cover everything you need to know about Public Goods for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What are public goods?
Public goods are non-rival and non-excludable.
What is non-rivalry?
A good is non-rival if it can be used again by another consumer with the same benefit.
For example, if I stand under a street lamp I would not be reducing the light for another person.
However, if I take some chocolate from a chocolate fountain, there is less left for the next consumer.
What in non-excludability?
A good is non-excludable if it is impossible to prevent someone from accessing it.
For example, it is impossible to block someone from standing near a street lamp.
What is the free-rider problem?
- Public goods are non-excludable and non-rival.
- This means that it is impossible to prevent a customer from accessing the good or service.
- This means that consumers have no reason to pay for the good or service.
- This means that firms cannot make any profit so they have no incentive to provide the good or service.
- If these types of goods are to the free market, there would be a missing market .
What is the solution to the free-rider problem?
The government must intervene to provide public goods for everyone.This this can be funded through taxes.
Summary questions
- what are public goods?
- what is non-rivalry?
- what in non-excludability?
- what is the free-rider problem?
- what is the solution to the free-rider problem?
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