Overview

• Why do we need to know about types of economic goods?
• What are the types of economic goods?
• Examples and Practice
• What was the first public good?

Why do we need to know about types of public goods

• Collectively owned vs privately owned goods present different problems
• Government is involved in all types of goods

If every tool is a hammer…

Why do we need to know about types of public goods

• Collectively owned vs privately owned goods present different problems

        + Optimal use - externalities in privately owned goods

Externalities

• An externality is a product of a transaction that is an unintentional byproduct and not priced into the transaction

• Positive examples:

    - education benefits society

• Negative examples

    - Pollution from a factory

Why do we need to know about types of public goods

• Collectively owned vs privately owned goods present different problems

  + Optimal use - externalities in privately owned goods         
  + Efficient use - incentives in collectively owned goods

Inefficiency in collective goods

Example:

• Budget Surpluses

budget surplus

Why do we need to know about types of public goods

• Collectively owned vs privately owned goods present different problems

  + Optimal use - externalities in privately owned goods         
  + Efficient use - incentives in collectively owned goods
  + Common goods - overuse of resources

The Commons

• Overuse of resources

Sheep on an overused common pasture

Why do we need to know about types of public goods

• Collectively owned vs privately owned goods present different problems
• Government is involved in all types of goods

Government and the types of goods

• Private - protection of private property

Government and the types of goods

• Private - protection of private property
• Club - protection of private property

Government and the types of goods

• Private - protection of private property
• Club - protection of private property
• Public - production and distribution

Government and the types of goods

• Private - protection of private property
• Club - protection of private property
• Public - production and distribution
• Common - management (or sometimes protection of private property)

Types of goods: defitions

Two questions, two axes

• Is the good excludable?

Example of excludable good

house with good fence and locks

Types of goods: defitions

Two questions, two axes

• Is the good excludable?
• Is the good rivalrous?

Examples of rivalrous goods

pizza

Types of goods

Types of goods

Types of goods

Types of goods

Types of goods

Types of economic goods: Examples

Market failure

market failure

What was the first public good provided by government?

What was the first public good provided by government?

Image Credits

If your only tool is a hammer

Tragedy of the Commons

House

Types of goods

Types of goods with examples

Michael Scott budget surplus

Market failure

?

Security