Public Goods, Global

Introducing Public Goods and Global Public Goods

Economic textbooks define public goods as goods that are nonexcludable, nonrival in consumption, or both. Nonexcludability means that the goods’ effects (benefits or costs) are there for all. Nonrivalry in consumption is given if one person's use of the good or one person's being affected by it does not diminish its availability for others. Goods with both these properties are called pure public. An example is the light of a candle, the service provided by a street sign, or peace and security. If a good possesses only one of these properties, it is impure public. The atmosphere is a nonexcludable, but rival good because unrestricted pollution can change its gas [Page 1409]composition and contribute to global warming. Patented pharmaceutical knowledge illustrates the case of a nonrival good, whose use can at least for some time be made excludable.

Goods whose effects can be withheld, irrespective of whether they are or are not nonrival in consumption, are private goods. However, the standard economics definition of public good fails to distinguish between a good's potential publicness and its de facto publicness. Yet this distinction is increasingly important. As a result of several change processes in the global era, including technological advances, strengthened policy design skills, increased porosity between markets and states, as well as greater political and social freedoms, it has become evident that publicness and privateness are in most cases not innate properties of a good, but are a social construct, a policy choice.

Therefore, it is important to distinguish between the potential and de facto publicness of a good. Goods that are de facto public may be public for several reasons. First, making them excludable may be technically impossible or too expensive. Second, goods may have been deliberately placed into the public domain and made nonexcludable and nonrival. Third, goods may be public by default, as a result of policy neglect (which often allows air pollution to continue) or lack of information (which has, for example, led to harmful substances being consumed before their ill effects were recognized).

...