Tradable Goods

And finance Allah shmoop What are public goods order Well

the public has a lot of things mostly opinions but

also goods like public goods or goods or services that

all people of society have access to which are created

for public benefit rather than profit If you want to

get all technical about it well public goods are non

excludable and non rivalrous Well non exclude ability means that

nobody is excluded Even if someone didn't cough up any

cash to receive the benefits of that good whether you

paid your taxes or not you can go to the

park into the library Didn't pay Doesn't matter We'LL Non

rival risk means that more and more people can consume

the good without additional costs and without preventing others from

consuming the good There Yeah just because your breathing the

air While that doesn't stop your neighbor from doing so

you can take your dog on a walk in the

park which won't stop others from indulging in the parks

Um you know Park nous well to contrast what's excludable

and rivalrous I e The opposite of a public good

Well a private good like How about roller coasters A

roller coaster is rival risk since there can be only

so many people on the roller coaster at once if

the theme park is conforming Teo you know safety regulations

Anyway The roller coaster is also excludable because well you

have to pay to get into the theme park to

ride the roller coaster because well theme parks care about

profit Roller coasters are definitely private goods Will public good

sound pretty great right There's something you topic about them

Everyone can use them at the same time and without

paying a cent But they have their fair share of

problems just like private goods The biggest issue is the

free rider problem which is well when people take advantage

of public goods by not paying their fair share of

the good For instance if you've ever watched a firework

show from afar for free when it cost money to

get closer well then you're a free rider You benefited

from the fireworks show but you didn't pay for it

and you couldn't be excluded from watch Sing it since

it's like you know in the sky well when people

get the benefits without having to pay for the costs

of that benefit Many goods and services that people would

otherwise be willing to pay for will disappear or never

make it to the market at all Take our fireworks

Example If everybody decided to free ride and watch the

fireworks show from a bit farther away for free and

nobody bought tickets to that firework show well then they're

probably not going to be one next year The moral

of the story while too much free riding kills firework

shows and you know other goods which is why exclude

ability and property lines are so important at least important

to respect A theme park wouldn't last long if there

wasn't a wall surrounding it and you could just walk

in and ride the roller coasters for free The free

rider problem goes hand in hand with positive externalities like

positive externalities air benefits somebody gets without paying for them

and without necessarily even asking for them For instance if

you love firework shows and happen to have a great

view of firework show from your backyard while you just

got a positive externality the fireworks show producer can't charge

you for viewing the show from your own backyard Maybe

there would be more firework shows if they could make

them mohr excludable reducing the positive vibes or positive externalities

that they're given out for free right So what makes

our public goods like parks and libraries work well The

free rider problem is avoided because those goods are typically

paid for by the government which means it's funded by

taxes And who pays taxes You D'Oh The public does

anyway the people who work which means free riding isn't

a problem because most people are already paying for the

parks and libraries Oh whether they like it or not

People who aren't paying taxes are free riding when they

hang out in the park in the library But because

the numbers of free riders air so few well it

doesn't really affect the funding of those goods And at

least as a present it's not problematic enough to make

libraries and parks shut down But we'LL see what the

future holds here What else are you free riding If

you're not paying your fair share of taxes while things

that everyone in the country benefits from like national defense

it's an access to clean air and water Public radio

Yeah that's a freebie to All right Well free riding

That isn't Okay Well the free riding Nicolas Cage does 00:04:10.095 --> [endTime] in Ghost Rider Yeah So not Okay Hi