Public or Private Good?. EXCLUSIVE? IS THE BENEFIT AVAILABLE ONLY TO THOSE WHO PAY FOR THE TRANSACTION? –OR DOES A SPILLOVER EXIST?

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Presentation transcript:

Public or Private Good?

EXCLUSIVE? IS THE BENEFIT AVAILABLE ONLY TO THOSE WHO PAY FOR THE TRANSACTION? –OR DOES A SPILLOVER EXIST?

RIVAL? IS THE BENEFIT ENJOYED SOLEY BY THE ONE CONSUMING THE GOOD OR SERVICE; IS IT A ZERO SUM GAME? –OR CAN ONE ENJOY THE COMSUMPTION OF A GOOD OR SERVICE, WITHOUT DIMINISHING THE CONSUMPTION BY SOMEONE ELSE?

YES NO YES NO RIVAL ? EXCLUSIVE ? CONGESTED TOLL ROAD CONGESTED PARKWAY UNCONGESTED TOLL ROAD UNCONGESTED PARKWAY PURE PUBLIC PURE PRIVATE EAT AN ICE CREAM CONE WATCH A MOVIE AT A THEATER FORT GREENE PARK MOST ANYTIME TIMES SQUARE ON NEW YEAR’S EVE?

Government must provide public goods –Goods meeting the criteria of both shared consumption and non- exclusion because a private market will not provide them –The FREERIDER DILEMA prevents the seller from recovering the full value to society of the good or service provided