Public goods are those for which there

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Quizplus · Accepted Answer

Public goods are characterized by nonrivalry, which means that consumption by one individual does not reduce the amount available to others, and nonexcludability, which means that it is difficult or impossible to prevent people from accessing the good. These features make it difficult for private markets to provide public goods efficiently, as there is no way for a provider to charge for its use and exclude non-payers. The absence of rivalry also means that there is no depletion of the good as it is used, so everyone can benefit from it without reducing its value. Therefore, public goods require government intervention or collective action to ensure their provision. The free-rider problem arises from the nonexcludability feature, as individuals can benefit from a public good without paying for it, leading to underinvestment in its provision. Externalities are a different concept, referring to the effects of a market transaction on parties who are not involved in the transaction. Public goods may or may not have external effects, but they share the nonrivalry and nonexcludability features.

Public Goods Are Those for Which There