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Definition
| a good that is both excludable and rival in consumption. |
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Definition
supplies of the good can prevent people who don’t pay from consuming it. A good is excludable: if the supplier of that good can prevent people who do not pay from consuming it. |
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| Private Goods=Rival in Consumption |
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Definition
They are rival in consumption: the same unit of the good cannot be consumed by more than one person at the same time. |
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Definition
| when a good is nonexcludable, the supplier cannot prevent consumption by people who do not pay for it. |
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Definition
| a good is nonrival in consumption if more than one person can consume the same unit of the good at the same time. |
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Definition
Private goods, artificially scarce goods, common resources & public goods. (Figure 18-1) |
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| Goods that are nonexcludable suffer from the free-rider problems: individuals have no incentive to pay for their own consumption and instead will take a “free ride” on anyone who does pay. |
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Definition
both nonexcludable and nonrival in consumption
Providing Public Goods- how much should be provided? (Figure 18-2) |
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Definition
| Governments engage in cost-benefit analysis when they estimate the social costs and social benefits of providing a public good |
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Definition
is a nonexcludable and rival in consumption: you can’t stop me from consuming the good, and more consumption by me means less of the good available for you. |
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Definition
common resources left to the market suffer from overuse: individuals ignore the fact that their use depletes the amount of the resource remaining for other. (Figure 18-3) |
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Term
The Efficient Use and Maintenance of a Common Resource |
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Definition
· Tax or otherwise regulate the use of the common resource
· Create a system of tradable licenses for the right to use the common resource
· Make the common resource excludable and assign property right to some individuals |
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