Wednesday, February 27, 2013

Rivalrous and Non-rivalrous Goods


The central government provides various public services to cover public needs. Non-rivalrous and non-excludable, public goods include environmental protection, water, education, defense, roads and bridges, light houses and street lighting. Everyone in society benefits from public goods and services provided by the government. The national defense of a nation is one example of public good provided by the central government where every citizen benefits from the protection provided by that nation’s armed forces from all sorts of outside aggression. It would be wasted efforts to allow state governments to oversee the running of our national defense operations. A ship plying a certain maritime area may not be able to obstruct other ships from using a single lighthouse that is open to all ships. On the other hand, a national defense perimeter in New York may not be available to other cities say, like the City of San Francisco, because there may be no need for such security arrangements. According to Hyman (2011), goods such as national defense cannot be sold in the markets to individual consumers for exclusive benefit.

Unlike private goods that are rivalrous and excludable, public goods are goods that are open to everyone. Everyone in the vicinity of a lake can enjoy the use of the lake without interruptions. While the government finances public goods through taxes collected from the public, it cannot at the same time charge fees for the citizen’s use of public goods such as national defense that is committed to the security and protection of the nation, social welfare programs that provide care to the elderly and the poor, and public education that is exclusively geared toward providing universal education.  There is congestion costs associated with the use of public goods such as when there is an increase in the number of users that reduces benefits to each user. When a scenic overlook area is congested, a negative congestion externality arises meaning some of the public viewers may not get the chance to see what is being viewed. The case of national defense best describes the most efficient public service provided by the central government.

References

Hyman, D.N (2011). Public Finance: A contemporary application of theory to policy (10th ed.). Mason, OH: South-Western, Cengage Learning.


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