Transportation Economics/Goods

Types of Goods There are four types of goods that are determined by their technical characteristics concerning excludability and rivalry: Excludability YesNo RivalryYesPrivate“Congesting” NoClubPublic Public goods are non-excludable and non-rivalrous, Private goods are both excludable and rivalrous. Club goods (for instance a country club membership) are excludable, but non-rivalrous (in the absence of crowding). Congesting goods are rivalrous but not excludable, for instance a crowded street. While an individual cannot be excluded from a city street that person’s presence may cost you extra time and his occupation of space does prevent you from occupying the same space at a given time. (Note that limited access highways are potentially excludable, unlike city streets.) Excludability Excludability implies that the good’s provider can prevent a user from obtaining it without charge National defense for instance is non-excludable, America’s nuclear weapons protect anyone in the country, whether or not they want it. On the other hand the sale of anything in a store is excludable – the owner can prevent a customer from obtaining a good unless the customer pays (assuming enforceable property rights etc.). Rivalry Rivalry implies that one person’s consumption of a particular good prevents another individual from consuming it. National defense again is non-rivalrous – one person’s protection does not prevent another’s protection. Shoes are rivalrous, only one person can wear a pair at a time.