What Are The Four Categories Of Goods?
To understand the difference between goods it is important to consider two characteristics. Is the good
► Excludable
Can you prevent people who don’t pay for the
good from benefitting from the use of it?
► Rival
When one person uses the good does it prevent
someone else from fully utilising it?
► Excludable
Can you prevent people who don’t pay for the
good from benefitting from the use of it?
► Rival
When one person uses the good does it prevent
someone else from fully utilising it?
With this in mind we can now group goods into four categories:
1. Private Goods
- Rival
- Excludable
e.g. A Car
2. Public Goods
- Non-Rival
- Non-Excludable
e.g. Lighthouses
3. Natural Monopolies
- Non-Rival
- Excludable
e.g. Cable Television
4. Common Resources
- Rival
- Non-Excludable
e.g. Hunted Animals
Problems can sometimes arise with these goods