Public goods

Economists describe a good as non-excludable when it is difficult or costly to prevent people from benefiting from it, and non-rival when one person's use does not significantly diminish another person's ability to use it. A pure public good has both characteristics. National defense and street lighting are conventional examples; clean air is often treated as a public good in open settings. By contrast, a private good such as food is generally both excludable and rival. Club goods can be restricted to paying members but are often non-rival until congestion arises, while common-pool resources—such as fish in an open-access fishery—are difficult to exclude people from using but can be depleted. These are analytical categories rather than fixed labels: technology, law, capacity and the setting can alter whether exclusion is possible or use becomes congested.

When people can benefit whether or not they contribute, each person may have an incentive to leave the cost to others. This is known as the free-rider problem. If providers cannot charge beneficiaries, a private supplier may be unable to recover the full social value of producing the good, so voluntary market supply can fall short of what people collectively value. This is a risk, not a claim that public goods can never be supplied privately: donations, community arrangements, bundled services and other institutions can support provision, and people's contributions may reflect social norms or motives beyond direct personal gain.

Governments often help finance or coordinate public goods through taxation, regulation or shared institutions, because these mechanisms can pool contributions and address free riding. However, 'public good' does not mean 'a service provided by the state': a government may provide goods that are excludable or rival, and a public good may be supported by private or community action. Nor does public provision automatically settle questions of how much to provide, who benefits or how costs should be shared. Those decisions involve information, distributional and political trade-offs as well as economic efficiency.

Some public goods cross national borders. The International Monetary Fund describes global public goods as benefits that affect people worldwide, including aspects of the natural environment and widely shared systems such as the metric system. Climate stability and public-health protection also involve cross-border benefits: reducing emissions or limiting disease spread can help people beyond the jurisdiction that paid for the action. Because no world government can readily compel every country to contribute, international provision depends on cooperation among governments and other institutions, and can be especially vulnerable to free riding.