What is a public good?

A public good is a good that is non excludable and non rivalrous. Non excludable means that anyone can use it; the benefits are not limited to just those who paid for it. Non-Rivalrous means that consumption by one person does not prevent consumption by others. Their non excludable nature may lead to the 'free-rider' problem for which people use the good without paying for it. Public goods are an example of a market failure as the private sector rarely provides them as they gain no profit from them. Therefore the government has to decide what output is socially appropriate. An example of a public good is a lighthouse as anyone can use it and its consumption is not limited to just one person.