#3: Private vs. Public Goods Characteristics of Public Goods 1. Provide benefits to many SIMULTANEOUSLY (at the same time): means that many people received the benefits of a good or service at one time and they are provided by the GOVENRMENT. 2. Would not likely be available if individuals had to provide them: providing mail service or military would be very difficult to create and be run like a business. 3. Include such items as interstate highways, postal service, and national defense The benefits of private goods such as ipods or computers, are usually received and used by one consumer. However, every citizen share the benefits of police protection or national defense. All the people receive the benefits of military protection and the services of the fire department whether or not they pay taxes to get that protection. To receive the benefit of an ipod, the customer must pay for the apple from a Mac Store.
Private Good:
Good or Service that can be withheld from a consumer who refuses to pay and whose consumption by one person reduces its availability to someone else! YOU OWN IT!
Public Good:
Good or Service that cannot be withheld from a consumer who refuses to pay for the goods or service and whose consumption does not reduce its availability to others. Public goods and services include: interstate highways, postal service and national defense.
How the Government PAYS for Public Goods and Services: The government pays for public goods and services through 1. tax revenue (money) 2. borrowed funds 3. fees (like tolls and park entrance fees).
Public Goods and
Private Goods and
Services
Services
iPad
Interstate Highway System
National Defense
Police/Fire Stations
Cold Stone Icecream
Postal Service
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