What Is a Public Good? Examine the Proposition That ‘the Production of Public Goods Cannot Be Left to the Market’

What is a public good? Examine the proposition that ‘the production of public goods cannot be left to the market’

A public good is a term in economics describing something that is both non-rival in consumption and non-excludable. Non-rival in consumption implies that the consumption by one individual (of the good) does not reduce the benefits derived by all other individuals i.e. by walking in a public park you are not reducing someone else’s enjoyment of walking in the same park. Non-excludability implies that if the good is provided, one person’s consumption of the good does not prevent another from consuming the good i.e. by breathing air I am not forcing others to asphyxiate. The absence of excludability has an inevitable free rider effect; if consumers can get away with consuming the good without paying for it – there may be an opportunity to keep quiet in the hope others will bear the costs of provision. However, if everyone chooses to play this strategy then nothing will be provided.

The easiest conclusion to derive from this would be in agreement with the question, that public goods cannot be left to the market because rational individuals will always try to avoid paying and, as such, must be bound into collectively paying under a fair system – like taxation. However, depending on the categorization of the good in question – some things may be able to be provided (and some provided more efficiently) by the private sector. By this I mean to say that there are very rarely goods that totally comply with the conditions of non-rival and non-excludability, for example, the use by individual A of a hospital means that individual B must wait. These goods/products, which are essentially public in nature but do not totally exhibit the non-excludability and non-rival in consumption traits, can be called quasi-public goods. As a result of the fact that these kinds of goods could realistically have a charge applied to them, it seems clear that these could be...