Public good

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In economics, public good denotes a good that can be made available to many consumers at low cost and at the same time it is very difficult to prevent other consumers from using or consuming this good.

A public good is thus defined by the two properties of non- excludability and non- rivalry . If these criteria are fully met, one also speaks of pure public goods , otherwise of unclean public goods . Public goods can be a cause of market failure . To solve this problem, the state can provide the public good itself or create incentives for private companies to produce the good.

Classic textbook examples for public goods are certain intangible goods (e.g. peace ), levees , lighthouses or street lighting . A more recent example that perfectly fulfills the properties of a public good is the earth's climate , and with it the question of who does climate protection .


Types of goods according to excludability and rivalry
Degree of rivalry
= 0
Degree of rivalry
= 1
Degree of exclusion
= 0
public good
(e.g. dyke)
Common good
(e.g. overcrowded inner city street)
Degree of Exclusion
= 1
Club good
(e.g. pay TV)
Private goods
(e.g. ice cream)


Public goods have the property of non- excludability , i. H. the inadequate allocation or enforceability of property rights to the good, for which there can be various reasons (economic, technological, institutional, normative, etc.). For example, it would not be possible to exclude someone from consuming the good “clean environment”. This characteristic does not have a constitutive effect on the existence of a public good , because it can also appear in the case of private goods. As a property, this characteristic can only be given to a good through the political decision-making process. For example, the good “broadcasting” usually appears in two forms: on the one hand, as a freely receivable good with non-excludability, on the other hand as a public good with at least partial realization of the exclusion (pay TV). Occasionally it is used synonymously with the characteristic of non-repudiation (compulsion to consume).


Public goods show no rivalry in consumption - they could be consumed by different individuals at the same time. Many authors refer to this as the decisive characteristic of public goods . For example, while a car can only be driven by one person at a time, a clean environment can be “consumed” by several individuals at the same time.

The rivalry over the consumption of a good can also be interpreted as a negative external effect . B. with overfill effects - set variably. For example, there can be mutual hindrance of road users on public roads . In contrast, there is a rivalry in consumption, especially in the case of traffic jams - when each additional vehicle negatively affects the other road users due to lost time. Such a road is considered a common good or unclean public good . If, however, a road user fee is levied and thus general access (exclusion) is prevented, a road can be classified as club property (not congested) or private property (congested).

Types of public goods

Some authors distinguish the terms collective good and public good , while others use them synonymously.

In theory, a distinction is made between pure public goods and mixed forms of public and private goods that represent impure public goods . Public goods that are consumed in several countries are sometimes referred to as global public goods .

If a public good that is deemed necessary is not offered by the market or is inadequate, this can be provided by the state.

Pure public good

Pure public goods (including specific public goods ) are goods for which the principle of exclusion does not apply and at the same time there is no rivalry in consumption (also known as benefit indivisibility ).

A market for such goods does not exist because there are interested parties for the good, but too few are willing to pay a market price with which the supplier would be willing to produce it. This is not necessarily due to the fact that one could also enjoy the good without paying the price for the good. One then speaks of so-called free rider behavior .

As a rule, the property is offered or made available by the state and all real and potential “users” are financially involved in it through taxes and other charges .

For example, national security is a public good financed by compulsory financing - it is consumed by all residents of a country at the same time, without the consumer benefit of each individual being impaired by the consumption of other individuals. At the same time, no single individual can be excluded from it.

Since pure public goods are freely accessible to all consumers, they also belong to the category of common goods .

Impure public good

An impure public good ( common good ) is understood to be a good for which the principle of exclusion does not apply, but for which there is rivalry in consumption. H. the benefit of a consumer is definitely limited by another user. The classic example of this is a congested road (without a toll, as this would mean that the exclusion principle works). An additional vehicle will further reduce the driving speed, etc. or increase the traffic jam costs. Environmental goods such as “clean air” or fish stocks in the sea are also often cited as examples of unclean public goods.

Public goods in experimental economic research

The experimental economics deals extensively with the problem of provision of public goods, in particular the free-rider problem .

This problem is usually modeled with a disbursement function for a period for the subject (i) as follows:

Where the endowment is in monetary units and the individual contribution, as well as the (interest) factor by which the sum of all contributions is multiplied. is the number of subjects and the index for all subjects. As a rule, this is repeated for several periods.

An interest rate is common . It corresponds to the characteristic of this problem that it would be better for the whole if everyone gave everything there (the public good earns positive interest). However, there is an individual incentive not to contribute because the marginal return on retention (1) is greater than the marginal return on the public good ( ). The economically rational person would therefore give nothing from the start, the public good is not offered.

The experiments have shown that the test subjects usually make a contribution, but that the overall contribution level collapses very quickly. The experimenters are now trying to use variations to find out how it can be achieved that a socially desirable level of contribution is achieved. Communication and punishment have proven effective, while rewards have not been successful. The contribution level is relatively independent of the group size and is sensitive to the interest rate.


There are different approaches to management:

See also


Individual evidence

  1. Pindyck, RS, & Rubinfeld, DL (2009). Microeconomics (Vol. 1069). Pearson Germany GmbH. P. 794.
  2. Bodo Sturm, Carsten Vogt: Environmental Economics. An application-oriented introduction. Physica-Verlag, Berlin a. a. 2011, ISBN 978-3-7908-2642-5 , p. 49.

Web links

  • Public good - definition in the Gabler Wirtschaftslexikon