11-1 The Different Kinds of Goods

Excludability: the property of a good whereby a person can be prevented from using it.
Rivalry in consumption: the property of a good whereby one person's use diminishes other people's use.
Private goods: goods that are both excludable and rival in consumption.
Public goods: goods that are neither excludable nor rival in consumption.
Common resources: goods that are rival in consumption but not excludable.
Club goods: goods that are excludable but not rival in consumption.

11-2 Public Goods

The free-rider problem keeps private markets from supplying public goods.
The government believes that they can collect taxes and use the revenue to solve the Free-Rider problem.
Free-rider: a person who receives the benefit of a good but avoids paying for it.

National defense is not excludable nor rival in consumption.
The U.S. federal government spent $744 billion on national defense in 2017.
Both small and big governments agree that national defense is good for the public.
Technological knowledge includes longer-lasting batteries, smaller microchips, or better digital music players.
Patents give inventors exclusive rights to the knowledge for a period of time. People have to pay inventors to use their patented information.
Once a theorem is proven, it enters society's general pool of knowledge that anyone has access to.

Cost-benefit analysis: a study that compares the costs and benefits to society of providing a public good.
Public projects consist of building new highways...etc...
Cost-benefit analysts find mere rough approximations on the costs and benefits of public projects.

The tragedy of the Commons: a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole.
A person's use of a common resource makes the resourceless enjoyable or special to others because common resources tend to be used more excessively.
To reduce the consumption of a resource, the government can implement regulations or taxes.

Clean air and water, and congested roads are forms of common resources.
Fish, whales, and other forms of wildlife are common resources with great importance, too.

Property rights can make the allocation of resources more efficient if they're well-run and planned. This could raise the economy's well-being.

Excludability: the property of a good whereby a person can be prevented from using it.
Rivalry in consumption: the property of a good whereby one person's use diminishes other people's use.
Private goods: goods that are both excludable and rival in consumption.
Public goods: goods that are neither excludable nor rival in consumption.
Common resources: goods that are rival in consumption but not excludable.
Club goods: goods that are excludable but not rival in consumption.

The free-rider problem keeps private markets from supplying public goods.
The government believes that they can collect taxes and use the revenue to solve the Free-Rider problem.
Free-rider: a person who receives the benefit of a good but avoids paying for it.

National defense is not excludable nor rival in consumption.
The U.S. federal government spent $744 billion on national defense in 2017.
Both small and big governments agree that national defense is good for the public.
Technological knowledge includes longer-lasting batteries, smaller microchips, or better digital music players.
Patents give inventors exclusive rights to the knowledge for a period of time. People have to pay inventors to use their patented information.
Once a theorem is proven, it enters society's general pool of knowledge that anyone has access to.

Cost-benefit analysis: a study that compares the costs and benefits to society of providing a public good.
Public projects consist of building new highways...etc...
Cost-benefit analysts find mere rough approximations on the costs and benefits of public projects.

The tragedy of the Commons: a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole.
A person's use of a common resource makes the resourceless enjoyable or special to others because common resources tend to be used more excessively.
To reduce the consumption of a resource, the government can implement regulations or taxes.

Clean air and water, and congested roads are forms of common resources.
Fish, whales, and other forms of wildlife are common resources with great importance, too.

Property rights can make the allocation of resources more efficient if they're well-run and planned. This could raise the economy's well-being.