Chapter 11 - Public Goods and Common Resources
Public goods, often called social or collective goods, are defined by two closely related characteristics:
they are nonrival in consumption, and their benefits are nonexcludable. Using these two charateristics, goods can be divided into four categories (see Different Types of Good page).
Although public goods and common resources are beneficial to society, a number of problems can arise such as the Free Rider Problem and the 'Tragedy of the Commons' (see Free Rider Problem and 'Tragedy of the Commons' page).
How can these problems be solved? The answer is quite simple – through government intervention.