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Delivery of Public Goods

Instructor: LeRon Haire
The lesson will define what a public good is as well as address how the government provides these goods. The lesson will also describe the two characteristics which make up public goods.

Public Goods & the Government

When used by themselves, people are very familiar with the term 'public' and the term 'goods.' However, when used together, they mean something entirely different. The phrase public goods refers to an item or a service that is provided for the benefit for a whole community instead of solely for an individual. If you are still unsure of what a public good is, let's take a closer look at some examples as well as how the government provides public goods to its citizens.

When speaking of public goods, we are typically referring to things that are provided by our government that's considered important. These can include things such as traffic lights, traffic signs, police service, and even a highway system. These and other related public goods are provided by the government primarily by citizens paying taxes.

A traffic light is an example of a public good provided by the government.
traffic

In its simplest terms, public goods are financed through taxation, which is defined as the method which things are taxed. The system is set up for taxes to finance government spending for public goods such as the ones mentioned earlier in this paragraph.

For example, taxes paid by citizens allows our government to be able to spend money to hire an adequate number of police personnel, which is dependent upon the size of the city or town it occupies. Our government must also properly budget their spending due to the number of public goods that are available to the community. While a police presence is needed, there are also funds needed for the traffic lights, city signs, the highway system, etc.

Can you imagine working with a large sum of money derived from paid taxes that is to be used to ensure that the community has operable public goods? The government has a monumental task by ensuring that citizens have public goods that are in working condition.

Two Characteristics of Public Goods

Public goods have two characteristics that allow it to clearly distinguish itself. These are non-rivalry and non-excludability. Let's define these characteristics and provide an example of each.

Non-Rivalrous public goods are goods that do not lessen for others when used by individuals. This is important for the simple fact that the non-rivalry public good is unable to be used up by any one person. Let's use a traffic light as an example. Although you may use a traffic light, this does not stop others from using the same traffic light.

The opposite of this type of good would be a rivalrous good, which diminishes as it is used by a person. A prime example of a rivalrous good would be a muffin. The more that you eat a muffin, the less of it will be left for another person. Non-rivalrous goods are public goods that are made to be utilized for a community as a whole.

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