Public goods — Edexcel A-Level Economics A
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Public goods explained
Goods are classified by two characteristics.
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Non-rivalry means one person's consumption does not reduce the amount available to others, so the marginal cost of an extra consumer is zero. Non-excludability means it is impossible or prohibitively costly to prevent non-payers from consuming the good. A pure public good has both characteristics, such as national defence or street lighting, and markets underprovide it because of the free-rider problem. A private good has both rivalry and excludability, such as a sandwich or a haircut, and can be traded in markets. Mixed cases exist: a congested road is rival but non-excludable, while a paywalled website is excludable but non-rival. These distinctions explain why government may provide public goods through taxation.
Your focus
- Define non-rivalry and non-excludability accurately.
- Classify goods as public, private or mixed using both characteristics.
- Explain why public goods are underprovided by markets and may require government provision.
Public goods exam tips
Marking Points
- Defines non-rivalry as consumption by one person not reducing availability for others, with zero marginal cost of an additional consumer.
- Defines non-excludability as the inability to prevent non-payers from consuming the good.
- Classifies a pure public good as having both non-rivalry and non-excludability, and a private good as having both rivalry and excludability.
- Explains the free-rider problem and why markets underprovide public goods.
- Recognises mixed or quasi-public goods that display only one characteristic.
Examiner Tips
- 💡Test each option against both characteristics separately before deciding.
- 💡Reject options that define public goods by ownership or funding rather than by non-rivalry and non-excludability.
- 💡Use a concrete example such as national defence or a sandwich to check whether the option fits.
Common Mistakes
- Treating public good as meaning any good provided by the government; correction: the term depends on non-rivalry and non-excludability, not on who provides it.
- Assuming non-excludability means the good is free to produce; correction: it means non-payers cannot easily be prevented from consuming it.
- Confusing rivalry with excludability; correction: rivalry concerns whether consumption reduces availability, while excludability concerns whether access can be restricted.
- Believing all public goods must be provided by the state; correction: government provision is common because of underprovision, but the defining features are the two characteristics.