Last modified on 10 November 2008, at 21:58

Transportation Economics/Goods

Types of GoodsEdit

There are four types of goods that are determined by their technical characteristics concerning excludability and rivalry:

' ' Excludability '
Yes No
Rivalry Yes Private “Congesting”
No Club Public

Public goods are non-excludable and non-rivalrous,

Private goods are both excludable and rivalrous.

Club goods (for instance a country club membership) are excludable, but non-rivalrous (in the absence of crowding).

Congesting goods are rivalrous but not excludable, for instance a crowded street. While an individual cannot be excluded from a city street that person’s presence may cost you extra time and his occupation of space does prevent you from occupying the same space at a given time. (Note that limited access highways are potentially excludable, unlike city streets.)


ExcludabilityEdit

Excludability implies that the good’s provider can prevent a user from obtaining it without charge

National defense for instance is non-excludable, America’s nuclear weapons protect anyone in the country, whether or not they want it. On the other hand the sale of anything in a store is excludable – the owner can prevent a customer from obtaining a good unless the customer pays (assuming enforceable property rights etc.).

RivalryEdit

Rivalry implies that one person’s consumption of a particular good prevents another individual from consuming it.

National defense again is non-rivalrous – one person’s protection does not prevent another’s protection. Shoes are rivalrous, only one person can wear a pair at a time.