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Private and Public Goods July 14, 2010

Posted by petrarcanomics in Role of Government.
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A pure private good is traded through voluntary exchange. People not part of the transaction can be excluded from it. Pure private goods cannot be characterized by shared consumption. The characteristic of shared consumption is defined as a good that can be consumed without depleting that good for the next consumer. Pure private goods do not have that characteristic.

Examples of pure private goods are usually produced by private firms.

  • cable television
  • haircuts
  • automobiles
  • most privately produced consumer goods

Public goods which are generally provided by all levels of the government possess the characteristics of non-exclusion of shared consumption. Non exclusion means that it is difficult to exclude consumers from using the good. A good that has the quality of shared consumption does not deplete the use of the good by others when it is being consumed.

Examples of public goods:

  • national defense
  • police and fire protection
  • street lights
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