Public Goods Vs Private Goods

What are Public Goods?

Public goods are the commodities or services provided by the nature of the
government of a country, free of cost or by taxing the few people to offer mass
benefit to the public in general.
Characteristics of Public Goods
These commodities or services develop the infrastructure and living standard of a
country. To know more about public goods, let us go through its following features:
 Non-Rival: The public goods are non-competitive, i.e. it can serve many
people at the same time without hindering the usage of one another.
 Non-Excludable: These goods are usually free of cost and can be used by
anyone without any restriction.
 Non-Reject able: The consumption of such goods cannot be dismissed or
unaccepted by the public since it is available collectively to all the people.
 Free-Riding: The goods categorized under public goods benefit even those
who have not paid for it. Such people are termed as free-riders.
What are Private Goods?
Private goods are the products or services which are manufactured or produced by
the companies owned by entrepreneurs who aim at meeting customer’s requirement
to earn profits through the trading of such goods in the free market.
Characteristics of Private Goods
Private goods serve the personal needs of consumers. Following are the various
characteristics of these goods:
 Rival: The private products involve rivalry or competition among the
consumers for its usage since the consumption by one person will restrict its
use by another.
 Excludable: These goods involve cost, and therefore the non-payers are
excluded from the consumption.
 Reject able: Private goods can be unaccepted or rejected by the consumers
since they have multiple alternatives and the right to select the product
according to their preference.
  Traded in Free Market: Such goods can be freely bought and sold in the
market at a given price.
 Opportunity Cost: These goods have an opportunity, i.e. the consumer has to
let go of the benefit from a similar product while selecting a particular private
commodity.

Advantages of Public Goods

Public goods carry the mass benefit for the people. They have a broader perspective.
These goods can be used by many people or the public simultaneously. These are
usually free of cost and can be utilized by the rich and poor equally. The primary
objective of such goods is to provide essential amenities to the public in general,
along with promoting social welfare and development of the nation as a whole.
Disadvantages of Public Goods
For providing public goods to be used by all the people, government charges tax
from a few consumers while the others are free to use the services or commodities
even without paying for it. They are called free-riders. Some also find a way for tax
evasion. This increase the cost of production of such products for the government
and leads to market failure.

Advantages of Private Goods

These goods have a mutual benefit for the manufacturers and the consumers; both
serve their purpose through the selling and buying of such products respectively.
Private goods are essential to carry on trade activities for economic development. It
is done with the motive of earning a profit from the entrepreneurs. Such goods
restrict the consumption by the people who do not have buying capacity, thus
limiting its usage by the rich in other words it discourages the free-riders.
Moreover, these facilities or benefits are taken for granted and misused or not
maintained by some people since they have not paid for it and did not realize its
value.
Disadvantages of Private Goods
Private goods are manufactured by the private sectors, and therefore they function
on demand and supply concept. These products or services goes on decreasing with
each use since the goods bought by one consumer cannot be purchased by the other.
These goods create discrimination among the rich and the poor or the payers and the
non-payers since they limit the access for those who don’t have purchasing power.
Summary
 Public goods are produced by the government or by nature for the welfare
of the people without any cost. But private products are the ones
manufactured and sold by private companies to earn a profit.
 When nature or the government provides public goods, private goods are
produced by the businessmen or the entrepreneurs.
 In the case of public goods, rich or poor can equally benefit from such
goods. Whereas, in fact of private products, only rich people who have the
purchasing power can relish its benefits.
 The former is readily available and accessible by all the public. However,
the latter diminishes with the consumption of each unit by the consumers.
 The quality of public goods remains constant for all consumers. But, the
quality of private goods varies as per the purchasing power, i.e. more
purchasing power means a better quality of the product.
 Public goods are a social choice, i.e. it aims at benefiting society as a whole.
Whereas, private products are a consumer’s preference and decision-based
on individual needs.
 The primary objective of the former is the growth and development of the
country; however, the latter aims at profit earning by the entrepreneurs.
 Public goods cannot be traded in the free market, whereas private products
are sold in the open market only.
 When public goods have no opportunity cost, private goods have an
opportunity cost where the person choose one product over the other.
 Public goods are available to even those who did not pay any tax known as
free-riders, whereas the same is not the case in private products.
 The former is non-rival, i.e. it is available and can be used equally by all
the public at the same time. However, the latter is rival and cannot be used
by the two or more people simultaneously.
  Public goods do not discriminate or restrict people by the buying capacity;
these are freely assessable by all. On the contrary, private goods are
excludable and prevent its consumption by the people who don’t have
purchasing power.
 The demand curve for public goods is horizontal, whereas the demand
curve for private products is vertical.
 The various examples of public goods are police service, fire brigade,
national defense, public transport, roads, dams and river. On the contrary,
clothes, cosmetics, footwear, cars, electronic products and food are
examples of private goods.

Both the goods, public and private are essential for the development of a country.
Public goods are a necessity to provide the essential amenities to the people for
improving the quality of life. Private goods are equally essential to meet the
consumer needs and requirements, enhance the trade activities in a country and
promote economic development.