We were talking recently. Also, benefits can be private and public. Actually, they are all located on a kind of spectrum from the “private” pole to the “public” pole.
Public goods are those goods, services and products that can be used unlimitedly by all individuals and are produced by society or the state. These things are not at all the same as private goods: although the producer bears the costs of producing such goods, they can be used by all people.
Let's consider interesting signs such benefits. The first of them is a sign "non-excludability" of consumers— that is, it is impossible for someone to restrict access to this thing. For example, a park. It needs to be maintained, but anyone can walk in it: from a respectable businessman to a homeless person.
Lack of rivals. In fact, when consuming public goods, there is no competition for their possession. For example, you are riding a bicycle on the road. At the same time, the road is a collective good: tractors, cars, and other cyclists ride along it. Of course, there are drivers who care little, but I sincerely hope they are a minority.
Indivisibility of a public good means that the consumer cannot somehow regulate the volume of consumed items. For example, the state provides us with the service of protection from external enemies who sleep and see how our country can be shredded into semi-dependent states. So all Russians enjoy this benefit. At the same time, it is impossible to determine its volume: which armies specifically are currently involved in the defense of Russia, in what quantities? How many Iskander installations are stored? restful sleep our citizens who are always dissatisfied with something? Who would know?
Territorial limitation of consumption of public goods. This means that its consumers can be representatives of a given community of citizens that occupies a certain territory. Although a completely different community can produce such goods.
For example, there is an international community that has obliged developed countries to implement environmental treatment facilities. It is clear that, for example, residents of Germany enjoy this benefit: they breathe clean air, drink clean water, walk on clean streets, live in houses made of environmentally friendly materials. Lepota!
Of course, I’m silent about Russia - with us, unfortunately, everything is on paper, and not in reality.
As a result, we can say that the existence of public goods is an example of an imperfect market when government intervention is required for their implementation.
Kinds
Pure public goods- exist only in theory, they possess all the above-mentioned characteristics of this category of things. Actually, that’s why there are no examples. Why don't these benefits exist in reality? Well, look: you see how people walk in the park, use the public good, you see that they really enjoy the weather and the park. But at the same time, all the benches in the park, as luck would have it, are occupied, and you feel the urge to sit. Got it?
Mixed blessings -represent the bulk of actually existing public goods. Mixed goods, in turn, are divided into overloaded and overfilled. I think it’s clear that the same parks and public places may overflow.
Also characteristic of reality is the limitation of the consumer exclusion rule. For example, everyone can watch TV, but there is cable TV at an additional cost. It’s the same as there are toll roads, etc.
Also among public goods there is such an interesting type as worthy and unworthy goods. Worthy ones are those that are provided by society, but individuals, due to the so-called sovereignty of the consumer, do not use them too much. Therefore, society should promote increased consumption of these goods.
To such worthy benefits include: free education, theaters, operas, etc. Well, who really goes to school? Yes, only a few. The rest serve out their free school education.
In turn, unworthy goods are those whose consumption should be limited. For example, consumption of alcoholic beverages, etc.
Examples of public goods
From all of the above it may seem that public goods are only government services. Indeed, the state itself is a normal service that gives us: “free” school education, roads, lights the streets, protects us from external enemies... And the more such social benefits, the more accurately we can call such a state social.
For example, I know that in many highly developed countries you can stock up on groceries for free every morning. And those who really have nothing to eat will definitely not die of hunger. In Hungary and the Czech Republic, cities are equipped with heating points where any homeless person (or ordinary citizen) can warm up and eat fried food for free.
In many states, unemployment benefits are such that you don’t have to work at all. For example, in Canada it is almost $500 per month (or per week - I don’t remember). In a word, you won’t die if you want to.
Meanwhile, not only some government services are called public goods. Social networks, Youtube, free services on the Internet: free mail, 30 gigabyte virtual disk, free online document editors... you can't count it all. Such public goods are provided by corporations such as Google Inc., Yandex LLC and others.
Oh in social networks I'm generally silent. Through Skype you can call anywhere in the world for free and arrange entire telephone or video conferences... Isn’t it a fairy tale? It turns out that not only the state provides us with public goods, but also large corporations.
But why do they do this - write your assumptions in the comments - we’ll discuss it!
Best regards, Andrey Puchkov
Despite the fact that many ecological problems can be solved by passing objects environment And natural resources into private property, there is a situation where this approach does not work. As noted above, the environment serves as a public good that provides vital conditions human existence, and a public good, by definition, has a number of properties that make its privatization impossible.
To understand the essence of the environment as a public good, it is important to draw a line between two opposing types of economic goods - pure private and pure public good. It should be noted that the public good is economic, that is, its creation consumes resources of a limited supply and is subject to economic problems of scarcity and choice.
Pure private good consumed individually as it can be divided into parts. Therefore, it can be purchased as private property, depriving other entities of the opportunity to use it for free. This property of a pure private good is called excludability. As a result, competition arises between potential consumers. Thus, a pure private good is characterized by divisibility, excludability and competitiveness.
Pure public good is characterized by indivisibility, and it can only be used jointly with other individuals. At the same time, access to the use of a pure public good is free, that is, it can also be used by those subjects who did not pay for it.
The differences between net private and net public goods can be presented in a table (see Table 1). Taking these differences into account plays a serious role in environmental policy,
since the quality of the environment is ensured through the implementation of state environmental programs, which are financed from budgetary funds, and here it is important to distinguish a pure public good from intermediate goods that combine certain features of a pure private and pure public good.
Table 1. Differences between pure private and pure public goods
One example intermediate good is essential (socially significant) good (merit good), that is, an economic good that, in the opinion of society, provides people with a decent existence, and therefore all citizens should have access to it, regardless of social status And financial situation. Although essential goods are indivisible, there are ways in which some entities can be deprived of access to these goods, and there is also competition between consumers for their quantity and quality due to “congestion.” Examples of essential goods include public libraries, public schools, and public radio and television broadcasting. However, some environmental benefits, for example, sources of drinking water, may also have these properties.
Intermediate ones also include club (dutiable) benefits. They are consumed in full and indivisible, but access to them is limited and allowed only for a certain category of people. These include hunting grounds, natural monuments, specially protected areas, etc.
Along with public environmental goods, there are resources that, on the one hand, are characterized by freedom of access, but, on the other hand, involve competition between consumers either for the quantity of the resource or for its quality. This natural sharing resources(common-pool resources), which include underground water sources, open sea fisheries resources, large water systems, assimilation potential of the environment, etc.
A feature of shared consumption resources is that none of the consumers are interested in using them economically. Access to them is free, and therefore everyone tries to make the most of them without caring about the interests of other people. Since most of these resources are exhaustible, their intensive use leads to depletion and degradation. This phenomenon, which was first studied by the American ecologist Garrett Hardin using the example of communal pastures, was called “the Tragedy of the Commons.”
The essence of this phenomenon is as follows. Suppose a rural community owns a pasture, the area of which is limited, and each village resident has the right to freely graze their livestock on it, receiving corresponding benefits from it. The more livestock grazing on a meadow, the worse its quality becomes. If grazing is reduced, the quality of the meadow will improve, but not a single member of the community will agree to this, because as a result his income will decrease. Ultimately, complete degradation of pastures occurs. However, the "tragedy of the commons" concerns not only pastures, but also other types of natural resources of shared consumption, such as fish stocks on the high seas.
5.2. Demand for a public good. Free rider problem
Theoretically, it is possible to construct a schedule of supply and demand in the market for a public good and determine its optimal output.
The demand curve for a public good coincides with the marginal social benefit curve from its consumption, which equal to the sum the winnings of all individual consumers of this good:
Where MSB(marginal social benefit) – marginal social benefit; M.B.– the marginal gain of an individual consumer, 
.
In contrast to the market demand curve for a private good, which is constructed by horizontally adding individual curves
demand, the market demand curve for a public good is constructed by adding individual demand curves vertically.
The graph (Fig. 8) shows the volume of public good output on the x-axis Q, and on the ordinate axis is its price P. Let us assume that the production of a public good occurs at constant costs. Then the marginal social cost curve characterizing the supply of the public good S, is a horizontal line. The intersection of the supply and demand curves gives the equilibrium price and optimal output of the public good. Therefore, the quality of the environment will be optimal Q*.
MB1
D=MSB= M.B.
Fig.8. Supply and demand in the public goods market
However, in real life Determining the optimal output of a public good is not as simple as the graph shows. The adequate amount of demand for a public good cannot be determined by market means due to the free rider problem. Since access to a public good is free, some entities prefer not to pay for it, which means they do not participate in compensating the costs of its production. In turn, because they do not pay for the product, the market does not capture their preferences and does not “see” their demand. This means that when constructing a market demand curve for a public good, part of the individual demand curves cannot be depicted, which means that the final value will be incorrect. Consequently, the true quantity of demand for a public good remains unknown, and therefore it is impossible to find the optimal quantity of output through the market.
These features of the demand for public goods make their production unprofitable for private business, and therefore the provision
the state takes over the consumers. It solves the “free-rider” problem by applying per capita taxation to all citizens of the country – potential consumers public good. At the same time, he has to determine the optimal quality of the environment by other means that replace market valuation.
Public goods occupy a significant place in the national economy. Their adequate interpretation, their production, distribution and consumption are the key to the effective functioning and development of the national economy.
In a general sense benefits- this is a certain set of means that allow you to satisfy the needs of both a specific person and the population as a whole.
In the national economy there is a wide variety of goods. Depending on their species, their essential characteristics are determined.
Based on the nature of consumption, the following main types of goods are distinguished:
1) public, characterized in that they are for free consumption by all members of society and cannot be used individually;
2) individual, characterized in that they can be used only by one member of society and are aimed at satisfying only his needs.
Among public goods, both public goods themselves and collective goods are distinguished.
A collective good differs from a public good in that it can only be used to a limited extent by all members of society.
Public goods- this is a set of goods and services that are provided to the population free of charge, at the expense of state funds.
Public goods include, for example, roads, health care, education, services provided by state and municipal authorities, and bridges.
The production and distribution of public goods are among the main functions of the state, its primary tasks. This shows the state’s focus on reflecting and realizing the interests of the entire population of the country. The form in which the state today assumes responsibilities related to public goods was formed only in the twentieth century. Today normal functioning It is impossible to imagine the national economy without such generally accepted benefits as free system healthcare, education, external and internal security of the state, social security and insurance. Public benefits include the work of civil defense services, liquidation emergency situations. The significance of public goods lies in the fact that they are needed not by part of the population, but by the entire population.
Regarding the mechanism of production and distribution of public goods, the laws of national economics are powerless - they are not able to work effectively in this area of the market. Therefore, objectively, this task is taken on by the state – the state apparatus.
Public goods have the following specific features:
1) the lack of competition in the consumption of public goods, due to the fact that the use of a good by one person does not in any way reduce its value and significance. The number of people using a public good does not significantly affect its value characteristics. For example, flowers planted in a flowerbed can be enjoyed by as many people as desired without causing a loss of value;
2) the indivisibility of the good, due to the fact that the individual cannot independently determine the characteristics of the good and the volume of its production. For example, street lighting cannot be turned on and off at a certain time at the request of a certain person. He can only use or not use this benefit;
3) the non-market nature of the value of the good, due to the fact that the laws of the free market and competition do not apply to it. The production of public goods cannot be regulated by the laws of the market, and therefore the state takes on this function, artificially determining the nature of the production and distribution of public goods;
4) the total and non-excludable nature of the good, due to the fact that its consumption cannot be limited to a certain group of the population, or the fact that this is not advisable. For example, the entire population uses street lighting and lawns - this process cannot be localized within a certain framework.
According to the criterion of the scale of distribution within the national economy, the following types of benefits are distinguished:
1) national public goods. These are benefits that matter and extend throughout the entire state. These include, for example, the activities of federal government bodies, the army, the Federal Security Service;
2) local public goods. These are benefits to which only part of the country's population has access. Usually these boundaries are drawn in accordance with the regional affiliation of the population. These include, for example, city parks and city lighting.
Depending on the degree of accessibility, the following types of public goods are distinguished:
1) excludable public goods. These are goods whose use may be limited to a certain circle of the population. For example, entry to a museum may be ticketed, and therefore the recipients of this good may be limited, but the characteristics of the good will not suffer from this;
2) non-excludable public goods. These are goods whose use cannot be limited only to certain circles of the population. This is, for example, city lighting.
Since the number of people consuming public goods is large, and charging for its provision is difficult, in this case the only effective producer of goods can be the state. The state can participate in the production of public goods in various ways:
1) indirectly. In this case, the state entrusts private sector enterprises with the production of public goods for a certain rate of remuneration. This form of state participation is effective in the case when the costs of private companies to produce the good will be significantly lower than if they were engaged in it government bodies;
2) directly. This form of production of public goods is based on the fact that the state directly and independently produces goods. This is only effective in certain cases where a high degree of concentration is necessary to produce goods production capacity, for example army, police.
In the national economy, these two forms of state participation in the production of public goods exist simultaneously. The criterion for choosing a specific form is economic expediency– minimizing the costs of producing a certain good while maximizing the result.
In order to effectively provide the population with public goods, the state must have certain financial resources that are necessary for their production, which are generated as a result of the collection of taxes. Taxes are a kind of payment for the use of goods, carried out by the entire population.
Public goods are goods or services that are consumed collectively by all members of society, regardless of how much each individual paid for their use. They are initially produced as intended for use by all members of the group. Examples include laws, national defense, collective order,
state parks and monuments, traffic lights, lighthouses and other utilities of a similar nature. The most important public goods, like the second and third, are necessarily provided by the state. Their material source is taxes, which are necessary to pay them. Demand for public goods and selling them on the market means that the buyer of such utilities makes them available to any members of the group, not just those who produce it.
Peculiarities
Public goods are characterized by the following characteristic features:
Private goods
This category of goods is contrasted with those resources, services and goods that are aimed at purely joint use. Each unit can be assessed and subsequently sold. Thus, it initially brings utility only to the individual consumer, but does not lead to any positive or negative effects for anyone else. Private goods have a completely different set of characteristic properties:
- First, they are inherently divisible, since they consist of a limited number of individual units, any of which is intended for use by an individual consumer.
- The consumption of private goods, in contrast to public goods, presupposes competition for them between consumers, since they will go to the one who pays a sufficient price for them.
- They are completely excluded from consumption. That is, they will go exclusively to those who paid for them.
Public and private goods.
Most of the goods offered by producers and in demand among consumers are goods intended for personal consumption, or private goods. A good is private if, having been consumed by one person, it cannot simultaneously be consumed by another.
Private goods
It is obvious that competitive and at the same time excluded goods have properties that make them maximally suitable for circulation in the market circuit. That is why such goods are called private. The consumption of a given private good by any economic entity makes it practically impossible for all other entities to consume the same good in the same ratio without the permission of its owner. A more specific and detailed analysis could reveal not only two poles in the presence of the competitiveness property - 100% and 0% - but also the entire spectrum of intermediate values - from complete (or one hundred percent) competitiveness through high (predominant) competitiveness combined with some non-competitiveness to low competitiveness with corresponding high non-competitiveness and, finally, complete non-competitiveness of various specific goods. But in this case it is enough to draw a line between goods with high and low competitiveness.
We can classify private goods as goods with high competitiveness in consumption, sufficient to concentrate in the hands of the subject consuming them the main part of the set of useful properties of such a good. You can do the same with their second characteristic under consideration. Here the line can be drawn between high and low excludability in consumption. In this case, goods with high excludability, sufficient to prevent all others, will be considered private. economic entities who are not the owners of this good, participate in its consumption. It would be more accurate to say that it is possible to prohibit other persons from consuming a private good with sufficiently low costs, and the higher the excludability of the good, the lower - of course, other things being equal - the level of such costs of the ban.
Thus, we can generalize all the properties of private goods:
Private goods are purchased individually, in accordance with the tastes and demands of specific consumers (selective property).
All private goods are represented by separate commodity units. The consumption of one unit of a private good by one consumer makes it impossible for another consumer to consume that unit of the good (divisibility).
Any private good has a price. Even the lowest price makes consumption impossible for some part of potential consumers, i.e. the price excludes the good from the consumption of some persons (exclusivity).
Any price must cover the cost of producing the good (cost recovery).
Pure private good- this is a good, each produced unit of which can be valued and sold for use to each specific consumer. Thus, each unit of a given good sold benefits only its buyer and cannot be used for free by anyone else.
So, for example, a thirsty person buys a can of Pepsi-Cola and, drinking it, single-handedly enjoys the delights of this drink. By paying money for a can of Pepsi-Cola, a person receives the exclusive right to use this good. And no one else can use this can of Pepsi-Cola to enjoy it.
In the case of pure private goods, it is assumed that all costs of their production are fully borne by the seller of the goods, and all benefits accrue only to the direct buyer; no costs and benefits can be transferred to any third party not participating in the transaction.
In economic terms, the purchase of a pure private good does not generate a positive externality.
Let us immediately note that the system of markets and prices perfectly serves the production, circulation and consumption of private goods. However, this system is completely unsuitable for the production of pure public goods.
Public goods
In the very general view Public goods are goods that can be consumed by many people at the same time. There are many examples of public goods. These include a bridge across a river, street lighting, a lighthouse at sea, defense, public safety, etc.
All the goods listed above have two important properties: non-excludability and non-rivalry in consumption.
The properties of non-excludability and non-rivalry in the consumption of public goods create difficulties for the provision and production of these goods by the private sector. Therefore, the production of public goods is provided mainly by the state. The most important problem here is how, in the absence of market demand, the state determines the volume of production of public goods.6
The non-excludability of a good implies that if a good is available for consumption by one person, then it is either technically impossible or very expensive to exclude other persons from the sphere of consumption of this good, i.e. it is impossible to prohibit the consumption of the good by other persons. If there is street lighting, then everyone who walks along the street uses the light of lanterns. If there is a national defense system, then it protects all the inhabitants of the country.
Non-rivalry in the consumption of a good means that the consumption of a good by one person does not affect the amount of that good available for consumption by others. In other words, a good has the property of non-rivalry if everyone can consume the same unit of the good. In terms of the cost of providing a good to an individual consumer, non-rivalry in consumption means that the marginal cost of providing a good to an additional consumer is zero (MCU = 0). The same example with street lighting shows that, no matter how many pedestrians there are on the street, the number of street lamps does not change, nor does the amount of light from street lamps change.
In fact, most mixed public goods are characterized by so-called overflow. It occurs when many people begin to simultaneously consume the same good. For example, in the case of highways, everyone can use them, usually without disturbing others. But on some sections of the road there may be a congestion of cars interfering with each other, which leads to a decrease in speed and restriction of other cars' access to the road.
Thus, overflow means that with a large number of consumers of a public good, a further increase in the number of consumers leads to the disappearance of non-rivalry in the consumption of the good. In this case, the marginal costs of providing this good to an additional consumer are no longer equal to zero, but are greater than zero (MCU > 0).
When characterizing public goods, it is necessary to keep in mind that not all benefits provided by the state are public goods. For example, food stamps that athletes receive through the Federal Sports Agency are private benefits. On the other hand, one must also keep in mind that some public goods are provided by the private sector. This applies in particular to the services provided to swimmers on the private beach.
The features of public goods are manifested in the formation of demand for public goods, as well as in determining the conditions for the equilibrium volume of production of public goods. When determining the conditions for the equilibrium volume of production of public goods, it is necessary to take into account such a property as non-rivalry.
