Economics Supply And Demand Questions Medium
The main difference between a public good and a private good lies in their characteristics and the way they are consumed.
A public good is a type of good that is non-excludable and non-rivalrous in consumption. Non-excludability means that once the good is provided, it is available for everyone to use or consume, and it is difficult to exclude anyone from benefiting from it. Non-rivalry means that one person's consumption of the good does not diminish its availability or utility for others. Examples of public goods include national defense, street lighting, public parks, and clean air.
On the other hand, a private good is excludable and rivalrous in consumption. Excludability means that the owner of the good can prevent others from using or consuming it if they choose to do so. Rivalry means that the consumption of the good by one person reduces its availability or utility for others. Examples of private goods include food, clothing, cars, and most consumer products.
The distinction between public and private goods is important because it affects the way these goods are provided and allocated in an economy. Public goods are typically provided by the government or public sector, as they are not efficiently provided by the market due to the free-rider problem. The free-rider problem arises because individuals can benefit from public goods without contributing to their provision. Private goods, on the other hand, are typically provided by private businesses and individuals through market transactions.
In summary, the key difference between public goods and private goods lies in their characteristics of excludability and rivalry in consumption. Public goods are non-excludable and non-rivalrous, while private goods are excludable and rivalrous.