James d. Gwartney

individuals to undertake activities that are inconsistent with ideal economic efficiency.

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control, national defense, municipal police protection, and mosquito abatement are examples
of public goods. Because these goods are difficult to supply through markets, they are often
provided by governments.
It is important to note that it is the characteristic of a good, not the sector in which it is
produced, that determines whether it qualifies as a public good. There is a tendency to think
that if a good is provided by the government, then it is a public good. This is not the case.
Many of the goods provided by governments clearly do not have the characteristics of public
goods. Medical services, education, mail delivery, trash collection, and electricity come to
mind. Although these goods are often supplied by governments, nonpaying customers could be
easily excluded and providing them to one party does not make them available to others. Even
a park is not a public good since non-payers can be excluded if desired—think EuroDisney.
Thus, even though they are often provided by governments, they are not public goods.
There are very few true public goods and services. In most cases it is easy to establish a
link between payment and receipt of a good or service. If you do not pay for an ice cream, an
automobile, television set, smart phone, a pair of jeans, and literally thousands of other items,
suppliers will not provide them to you and you cannot freely benefit from those items
purchased by others. In the case of private goods, it is unlikely that consumers will benefit
from government provision.
Video:
The Economics of Robocop
Externalities
Sometimes the actions of an individual or group will “spill over” and exert an impact
on others, affecting their well-being without their consent. Such spillover effects are called