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    Alex Valiukas
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    This document categorizes different types of goods based on their characteristics of excludability and rivalry. It discusses four types of goods: private goods, which are both excludable and rival; club goods, which are excludable but non-rival; common property goods, which are non-excludable and rival; and public goods, which are non-excludable and non-rival. The document states that public goods pose a market failure because without government provision, they will not be adequately supplied due to lack of property rights. Common property goods also experience market failure due to lack of property rights and potential overconsumption, or "tragedy of the commons." The government must intervene to

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    This document categorizes different types of goods based on their characteristics of excludability and rivalry. It discusses four types of goods: private goods, which are both excludable and rival; club goods, which are excludable but non-rival; common property goods, which are non-excludable and rival; and public goods, which are non-excludable and non-rival. The document states that public goods pose a market failure because without government provision, they will not be adequately supplied due to lack of property rights. Common property goods also experience market failure due to lack of property rights and potential overconsumption, or "tragedy of the commons." The government must intervene to

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    © All Rights Reserved
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    21 views4 pages

    Types of Goods

    Uploaded by

    Alex Valiukas
    This document categorizes different types of goods based on their characteristics of excludability and rivalry. It discusses four types of goods: private goods, which are both excludable and rival; club goods, which are excludable but non-rival; common property goods, which are non-excludable and rival; and public goods, which are non-excludable and non-rival. The document states that public goods pose a market failure because without government provision, they will not be adequately supplied due to lack of property rights. Common property goods also experience market failure due to lack of property rights and potential overconsumption, or "tragedy of the commons." The government must intervene to

    Copyright:

    © All Rights Reserved
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    of 4

    Types of Goods

    Wednesday, 5 May 2021 1:08 pm

    • Market Failure arising from the characteristics of goods


    ○ Excludability
    § Means that does not pay for the good or service cannot consume it.
    § This means that there are property rights so if you do not own it you cann
    consume it.
    ○ Rivalry
    § Is the situation that occurs when one person consuming the good or servic
    means another cannot consume it.
    ○ So we can use these characteristics to categorise goods and this enables us to
    understand when the market fails.
    ○ 4 types of goods
    § Private
    § Club
    § Common property
    § Public
    Excludable Non-excludable
    Rival Private Common Property good
    Eg fish in a river
    Non-Rival Club goods Public good
    Eg foxtel or netflix street lights or public path
    National defence

    § Public goods
    □ These are considered to be a market failure.
    ® No private firm would be willing to supply a public good becau
    there aren't any property rights so people can consume it
    regardless of whether they have paid.
    ® If the government does not provide public goods they will not
    provided and society will be worse off.
    ◊ In theory you could privatise these things but like some
    people would get fucked over
    § Club goods
    □ Not failure because they have property rights so people who don’t p
    cant use. But on person wont lose out because the other gets.
    not

    ce

    use

    t be

    pay
    ◊ In theory you could privatise these things but like some
    people would get fucked over
    § Club goods
    □ Not failure because they have property rights so people who don’t p
    cant use. But on person wont lose out because the other gets.
    § Common resources
    □ Rival Non excludable
    ® There are no property rights so there is mqraket failure.
    ® The market would fail to provide a public good due to the lack
    property rights
    ® This means they have to be provided by the government inste
    ® The issue is that there are 'free riders' these are people who a
    able to consume them even if they haven't contributed to it’s
    upkeep or construction.
    ® Tragedy of the commons
    ◊ Common property goods share non-excludable
    characteristics of public goods but are rival in consumpt
    ◊ For example, the ocean, ownership is universal there are
    property rights
    ◊ But if you use the ocean you impose an external cost on
    other users reffered to as the 'tragedy of the commons'
    ◊ So governments need to intervene and act as the protec
    and regulator to prevent abuse of commonly owned
    resource. The way the government does this is by
    introducing restrictions eg licences.

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