Private good
|
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) |
All goods that can be offered on the market due to their properties are referred to as private goods or individual goods . These properties are
- Exclusibility : An individual can be excluded from using the property. Use (power of disposal) is only made possible by paying a price .
- Rivalry : The consumption of this good by one individual precludes the consumption of the same good by another individual.
If both criteria are not met, it is a public good (e.g. national defense) that cannot be offered by the market ( market failure ). Here the state has to take corrective action in the market.