Finance glossary
Public Good
Definition
Something one person's use does not diminish and from which others cannot easily be excluded.
A public good — national defence, street lighting, clean air, basic research — is non-rival and non-excludable, so private markets underprovide it: everyone benefits whether or not they pay, so no one wants to pay. That free-rider problem is the standard economic argument for funding such things through taxation.
In a sentence
Street lighting is a public good, since nobody can be billed for walking under it.
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