Public Goods Cristina E.

Ciocirlan Department of Public Administration, Pennsylvania State University at

Harrisburg, Middletown, Pennsylvania, U.S.A. INTRODUCTION Public–Punctuated Public, or collective, goods
are characterized by non excludability in use, non-rivalry in consumption, or both these characteristics
combined. A good is non-excludable if it is costly and counterproductive to exclude individuals from using it. It
is non-rivalrous if one person’s con sumption cannot reduce or impede the ability of others to consume the
good. When individuals do not take into account the marginal social cost of consumption, the public good
becomes congested. Generally, a public good is also indivisible; one cannot meaningfully speak of units of a
public good (e.g., ambient air). When public goods are provided through collective action settings, there is a
high likelihood of conflict between self-interest and group interest. This conflict leads to a prisoner’s dilemma
type of outcome, which corresponds to a Pareto-inferiora allocation of goods in economy. Theinherent nature
of public goods and thecollective action problems can lead to the failure of markets to achieve Pareto
efficiency.b Thus, there is a justifiable role for government intervention. Legislators are faced with the problem
of pricing public goods and providing the value-maximizing quantity of public goods for society.
CHARACTERISTICS OF PUBLIC GOODS Public, or collective, goods are non-excludable in use, non-rivalrous in
consumption, or may exhibit both these characteristics in varying degrees. A good is non-excludable if it is
impossible to exclude other indi viduals from simultaneously consuming the same good. It is non-rivalrous if
the consumption of one person of the public good does not impede another person’s consumption of the same
good at the same time. Both the consumption and the production of public goods are indivisible; public goods
cannot be divided up and aA Pareto-inferior allocation of goods is not a socially ideal outcome because it is
possible to find a different allocation that makes some individuals better off without making anyone worse off
(Ref.[1]). bA Pareto-efficient allocation of goods is an optimal allocation; it is impossible to find an alternative
allocation that makes some indi viduals better off without making anyone worse off (Ref.[1]). 1628 sold.[2]
Public goods can often be congested or non congested. Congestion occurs when the marginal social cost of
consumption exceeds the marginal private cost of consumption.c The divergence between these costs
represents an externality of consumption. When non excludable and non-rivalrous public goods are also
uncongested, they are called ‘‘pure public goods.’’ Lighthouses and national defense are classic examples.
When these goods are congested, they are called ‘‘ambient, or impure, public goods’’ with consumption
externalities.d Ambient air is an example. When con sumption of public goods is limited to residents of the
political jurisdiction in which these goods are provided, they are called ‘‘local public goods.’’[2] In contrast, the
defining characteristics of private goods are rivalry in consumption, excludability in ownership and use, and
divisibility. Rivalrous con sumption means that a private good is consumed exclusively by the person who buys
it. If person X wears a pair of shoes, person Y cannot wear the same shoes at the same time. Excludability in
ownership and use means that one has control over use of the good. One can undoubtedly decide who is
allowed to drive their car. Private goods are divisible; they can be divided into units and assigned a unit price.
The public good–private good dichotomy recog nizes a continuum between the two extremes. Any good exhibits
one or more of the public good charac teristics. When public good characteristics are found in a commodity,
both the need for consumers to pay for it and the incentive of suppliers to provide it are challenged. Thus,
markets tend to produce those com modities with public good characteristics in ineffi ciently small quantities