2.  What are public goods?

The book defines public goods as goods that are in the public domain—there for all to consume. In fact, there are three types of goods in the public domain:

• Goods that cannot be made excludable, either because doing so would be too expensive or impossible. The warming rays of the sun are an example.

• Goods that have deliberately been made public by design. Examples are a country’s judiciary system, street signs, or basic education for all.

• Goods that are public by default, either due to lack of requisite knowledge or due to policy neglect. An example of the first case (publicness due to lack of knowledge) are Chloro Fluoro Carbon (CFC) emissions during earlier times, when we did not fully understand the effect of these emissions on the ozone layer. Examples of the second case are air pollution, crime and violence, or communicable diseases, which we would know how to reduce, but are often allowed to go unchecked.

Economists will note that this definition varies from those in the textbooks, which define public goods (bads) as those goods that have nonexcludable benefits (costs). That is, goods whose effects can be withheld at little (or zero) cost by the owner or provider are said to be excludable or private. If a public (nonexcludable) good is, in addition, non-rival in consumption (i.e., if its consumption by one individual does not detract others from consuming it), it is called "pure public."