a Define public goods and common resources How are they simi

a- Define public goods and common resources. How are they similar and how are they different. Are markets efficient in the presence of public goods and common resources?

b- Why or why not?

Solution

Public goods is a good which is non excludable and non rivalrous. Where use by one individual doesnot effect the availabilty by others

Common goods are rival but not excludable

Example of public goods are national defense, uncongested nontoll roada

Example of common resource are fish in the ocean, environment etc

Market doesnot effect the public good because the person using it is a free rider. He will think that others will pay for his good.

There can be a market interuption in common resources as private player can come in and develop a market for products like pure air and water.