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Public Goods and Common Problems

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A Teaching Topic in Economic Analysis 

Public Goods and Common Problems 

A public good is a product that one individual can consume without reducing its availability to another individual (non-rivalrous) and from which no one is excluded (non-excludable) (Investopedia). Examples of public goods include roads and national defence. This topic uses the concept of public goods and the "free rider problem" to explore why some goods are produced at less than socially optimal levels by markets.

Topic Learning Outcome: Appropriately utilize and interpret results of applying the principles of public goods and commons problems to the analysis of public policy and management problems.

Core Concepts associated with this Topic: Free Rider, Public Good, Tragedy of the Commons

Recommended Reading

University of Toronto: PPG-1002

Varian, Hal R., and Jack Repcheck. Intermediate microeconomics: a modern approach. Vol. 6. New York, NY: WW Norton & Company, 2010. Chapter 36 (p. 695-718).

Carleton Unversity: PADM-5111

Frank, Robert, Ian Parker, and Igela Alger. Microeconomics and Behaviour, 5th Canadian Edition. New York: McGraw-Hill, 2013. Chapter 16 and 18.

Harvard Kennedy School: API-101

Pindyck, Robert S. and Daniel L. Rubinfeld. Microeconomics, 8th Edition. Prentice-Hall, 2012. Chapter 18 (661-690).

NYU Wagner: GP-1018

Krugman, Paul and R. Wells. Microeconomics, 3rd edition. London: Worth Publishers, 2012. Chapters 6 and 7 (up to p. 201).

Johnson-Shoyama: JS-805

Krugman, Paul, Robin Wells, and Anthony Myatt. Microeconomics: 1st Canadian Edition. London: Worth Publishers, 2006. Chapters 18 - 20.

Weimer, David L. and Aidan R. Vining. Policy Analysis, 5th edition. London: Longman Publishers, 2011. Chapters 5 - 7.

George Washington: PPPA-6003

Mankiw, N. Gregory. Principles of Microeconomics, 6th edition. Mason: South-Western College Publishers, 2011. Chapters 10 and 11.

Wheelan, Charles. Naked Economics: Undressing the Dismal Science. New York: W. W. Norton & Company, 2010. Chapter 3.

American: PAUD-630

Krugman, Paul and R. Wells. Microeconomics, 3rd edition. London: Worth Publishers, 2012. Chapter 17.


Goolsbee, Austan, Steven Levitt, and Chad Syverson. Microeconomics. New York: Worth Publishers, 2013.

Rutgers- Economics in Public Policy

Pindyck, Robert S., and D. Rubinfeld. Microeconomics, 7th edition. Upper Saddle River: Patience-Hall, 2007. Chapter 18.


Sample Assessment Questions:

1.) What are the characteristics of public goods? Why do public goods produce market failures in the absence of government intervention?

2.) What is the "free rider" problem? How does this relate to the concept of public goods, and why is it an important concept for policymakers to understand? Please use an illustrative example in your explanation.

3.) What is the "tragedy of the commons?"

Page updated by Sean Goertzen and Ben Eisen on 16 April 2015.


Important Notices
© University of Toronto 2008
School of Public Policy and Governance