Public goods: concept, types, examples, production

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:46

A public good is a good that is shared by the inhabitants of a country and is available to many people. It differs from private goods in that it benefits not one individual, but a large number of people on an equal footing. Public goods can be paid or free. However, the punishment for unpaid use of paid public goods or goods is much milder than for private ones. In the latter case, this means theft, which falls under the category of criminal acts.

A public good (or service) is a good intended for public rather than private use. It is used for general purposes. The production of public goods is most often paid for by the state. At the same time, its use benefits or benefits a large number of people.

Features of public goods

Such benefits have the following characteristicsfeatures:

They are used by anyone. Forbidding a specific person to do this is almost impossible.
Public goods are inherently non-competitive. Their consumption by one citizen has almost no effect on the ability of other people to use it.
Such goods cannot be separated into separate components.

Degree of public

It is not always possible to clearly separate public goods and benefits from private ones. This division only applies to specific positions. Between them are mixed variants, which are much more common than those belonging to only one type.

Strictly public goods include breathing air, rainwater, street lamp or beacon light, solar and wind energy, etc. With some restrictions, such goods include public transport, train stations, airports, libraries, theaters, roads and railways, parking lots.

How the demand for public goods is determined

Total demand for a public good is determined by the amount paid by all consumers per unit of the good. Marginal demand is determined by the maximum number of users who can comfortably fit within its boundaries or use it at the same time.

The role of the state and private individuals in the creation of public goods

Most often, public goods are created by the state. Less often, private individuals become the initiators of their creation. In the past, the construction of lighthouses in England was carried out not only bygovernment, but also by private companies. The creation of parking lots, buses, cinemas, tourist facilities and infrastructure can also be carried out by private owners.

What are public goods

Such goods are products and services that are used by a large number of people on an equal basis, often for free. These include, for example, road signs, city trash bins, street lights, traffic lights, subway turnstiles, electronic scoreboards, tableware in canteens, playground equipment and many other things. The share of public goods is higher under socialism than under capitalism. However, in any social structure, it is quite significant.

Paying for public goods

Prohibiting specific citizens to use such goods often does not make sense and may lead to negative consequences. However, in some cases they can be paid. For example, recently the passage on part of the federal highways became paid. At the same time, it is impossible to make paid use of street lighting, paving slabs, a breakwater, a lighthouse, while fees for public toilets, travel in public transport, meals in a canteen or use of a carousel in a city park are often established and are economically feasible.

Payment for some public goods is a certain assistance to the state in creating new and maintaining already created goods/benefits in proper condition. If people are unwilling to pay for them, finding loopholes for free use, then this reduces the ability to upgrade them, inas a result, the fund of such objects decays and wears out. The increase in the number of benefits and the beneficiaries themselves is also leading to this. The authorities need more money from the budget, which ultimately affects the wages of Russians. At the same time, if the authorities set too high a cost for using a good/good (for example, the price of a bus fare), then some people will want to not pay for a ticket, because such a price seems too high to them.

It is clear that this is just one of many factors affecting the quality of life of citizens, and perhaps not the most important, but also contributing.

Public Good Concept

Such ideas were developed by economists. In order to create a theoretical basis for the analysis of the amount of expenditures of local authorities, it is proposed to use the concept of "public goods". In accordance with it, the most important task is the need to provide the population with public services and goods. Among them are the military-industrial complex, science, the judiciary, nature conservation, etc. All this is exclusively within the competence of the state.

When the number of users of a particular product or benefit increases, it can begin to wear out faster, as happens, for example, with the roadway. Therefore, the task of the state is to maintain their condition at a satisfactory level. The most problematic is the depreciation of housing and communal services, the fight against which requires large expenditures. It is impossible to ignore this problem, becausein this case, the process of wear and dilapidation will continue, until such a fund becomes unusable. The state can cover expenses at its own expense or at the expense of the consumer.

Absolute and relative goods

According to the public good theory, there are absolute and mixed goods. There are no clear boundaries between them. For example, a rented car can be classified as a public product of a mixed type. Although not personally owned by the buyer, it is used by him for some time, and then the car passes to the next user. Relative public goods include items such as a plate in a dining room. A person uses it personally (within certain rules) for a while, and then it passes to another visitor.

An example of public goods of the absolute type is a street lamp. No one pays for the light, and therefore for all the elements of its design. At the same time, a huge number of people, including motorists, can become users of lighting. An artificial earth satellite is also an absolute public good. It relays the signals used by a huge number of people when watching satellite TV, talking on a mobile phone or when browsing the Internet. However, no one uses it directly or alone.