1.6.2—Public goods

A public good is non-rival: one person’s use does not substantially reduce another’s, and non-excludable: it is difficult to prevent non-payers from benefiting.

These properties create a free-rider problem, because individuals can wait for others to pay. Governments or collective arrangements may therefore provide the good, though congestion can make rivalry change at the margin.

A lighthouse signal can guide many ships at once and is difficult to withhold from a non-paying ship; national defence has similar properties.

Public does not mean government-produced and free does not mean no resource cost; the classification concerns rivalry and exclusion.