Public good

 An item whose consumption is not decided by the individual consumer but by the society as a whole, and which is financed by taxation.

A public good (or service) may be consumed without reducing the amount available for others, and cannot be withheld from those who do not pay for it. Public goods (and services) include economic statistics and other information, law enforcement, national defense, parks, and other things for the use and benefit of all. No market exists for such goods, and they are provided to everyone by governments. See also good and private good A product that one individual can consume without reducing its availability to another individual and from which no one is excluded. Economists refer to public goods as "non-rivalrous" and "non-excludable". National defense, sewer systems, public parks and basic television and radio broadcasts could all be considered public goods. One problem with public goods is the free-rider problem. This problem says that a rational person will not contribute to the provision of a public good because he does not need to contribute in order to benefit. Public goods are goods that can be consumed by everybody in a society or nobody at all. They cannot or will not be produced for individual profit, since it is difficult to get people to pay for its large beneficial externalities. It is helpful to think about a public good as one with a large positive externality. A public good is defined as an economic good which possesses two properties: non-rivalrous and non-excludable. Some examples of public goods include clean air, national defense, the judiciary, lighthouses, street lights, and the well know example of a fireworks show

A public good is often (though not always) under-provided in a free market because of its characteristics of non-rivalry and non-excludability.

Public goods have two characteristics:

1. Non-rivalry: This means that when a good is consumed, it doesn’t reduce the amount available for others.
   – E.g. benefiting from a street light doesn’t reduce light for others, but eating an apple would.
2. Non-excludability: This occurs when it is not possible to provide a good without it being possible for others to enjoy. E.g erecting a dam to stop flooding, or providing law and order.

A public good is a term used by economists to refer to a product (i.e., a good or service) of which anyone can consume as much as desired without reducing the amount available for others¹.

It is the opposite of a private good, which is any product for which consumption by one person reduces the amount available for others, at least until more is produced. Most products are private goods, but some of the most important products are public goods.

Many products have characteristics of both a public good and a private good. Thus, the term public good is usually used to describe products that are dominated by their public good nature, and the term pure public good is used to describe products that do not possess any of the characteristics of a private good.

There is no automatic connection between public goods and the public sector (i.e., government) or between private goods and the private sector (i.e., businesses and consumers). However, it is very often the case that public goods are supplied by the public sector, or with some sort of assistance from it, and in capitalist countries private goods are generally supplied by the private sector.

Examples of public goods include mathematics, algorithms, melodies, cooking recipes, radio and television broadcasts, languages (both human and programming), computer software, stories, web sites, national defense, clean air, the light from lighthouses and uncongested roads. Examples of private goods include airplanes, apples, books, computers, fingernail polish, flashlights, gold, guns, houses, olive oil, pianos, sheep, radios and shirts.

It can be seen that public goods tend to be intangible items, that is, things which are difficult to grasp with the hands, and that many of them fall into the category of information or knowledge. Private goods are invariably tangible items, that is, items that can be touched, moved and/or seen by humans. Very often both types of goods work in tandem or are symbiotic; for example, a piano, which is a a private good, can be used to play a melody, which is a public good, the methods for creating both a piano and a melody are public goods, and a specific performance of the melody on the piano is a private good³ but a radio or television broadcast of that performance is a public good.

Another example is computer hardware and software. The hardware (i.e., the computer itself and peripheral devices such as monitors, printers, modems and keyboards) are all private goods, because use by one person reduces the amount available for others. But the software (i.e., operating systems and application programs) used on it is a public good because anyone can use as much as desired without reducing the amount available for anyone else⁴.

Some products may begin to lose some of their characteristic of a public good as a result of negative externalities that occur when consumption rises beyond a certain level. An externality is a cost or benefit that results from an individual or group engaged in an activity to other individuals or groups. Examples of negative externalities include congestion (e.g., on roads or on shipping lanes near lighthouses) and pollution (e.g., air, water or noise). An example of a positive externality is pollination of farmers' crops by bees kept by a beekeeper.