Key concept: Public goodsAs indicat

Key concept: Public goods
As indicated in the text, economists recognise three main forms of ‘market failure’:
public goods, monopoly and externalities. Here we concentrate on the first of
these justifications for state intervention in a market economy.
The concept of a ‘public good’ is perhaps best illustrated by comparing it with the
idea of a ‘private good’. Private goods (or services) are those products which can
be wholly consumed by an individual, as when you wisely bought this particular
book or ate a sandwich in the student refectory. This notion of comprehensive and
exclusive consumption is critical to the operation of a free market.