ECON 100 Public Goods vs Private Goods

St. Charles Community College 
Econ 100    Survey Economics


Public Goods vs  Private Goods

 

Features  Private Goods  Public Goods
Payment Payment is made prior to the receipt of the goods. (Or, payment provisions are made prior to the receipt of the goods.) Time and method of payment are uncertain.
  • The free rider problem. 
  • The drop-in the-bucket problem.
Consumption When one person or one group consumes the product or service, all others can not Everyone can consume the chosen good or service. The good or service is said to be non-rival in consumption.
Benefits The one who consumes the good or service does so to the exclusion of all others. No one is excluded from the benefits once society decides what the package will be and the goods and services are produced. The benefits are “collective benefits”.
Demand
  • Consumers can pick and choose as they wish in selecting the goods and services
  • Quantities demanded are totaled for each good and service to make up total market demand
  • Market demand is summed horizontally.
  • Consumers (citizens) can not pick and choose.
  • Once society decides which public goods to choose, the quantities demanded for that good or service is fixed
  • Demand is summed vertically.