Public Goods

Economics distinguishes between private goods and public goods. By definition, any pure public good lacks two key technical attributes that any pure [Page 2810]private good possesses. While largely theoretical, the distinction is very important for understanding actual markets and governments. In practical terms, private goods are basically those that markets can produce and sell. Public goods are basically those for which markets will fail or at best perform below social requirements. Given such conditions of “market failure,” either governments or private clubs must act if there is to be production and distribution of the good. Real markets often require government activities of some type. Enforcement of private contracts in courts is an example. Many private goods are therefore not strictly speaking “pure.” This entry begins ...