Question

1. Classify the following goods according to their excludability and rivalry. Explain your reasoning.

a) Your Facebook page.

b) A seat at the final game of the NCAA men's basketball tournament (go Duke!)

c) A pay-per-view movie on television.

d) Amazon's webpage.

e) Firefighting services.

f) A trip to space on Virgin Galactic.

Answer 1

Excludability: a good or service is called excludable if it is possible to prevent people who have not paid for it from having access to it. On the contrary, a good or service is non-excludable if non-paying consumers cannot be prevented from accessing it.

Rivalry: A rival good is a type of good that may only be possessed or consumed by a single user. These items can be durable, meaning they may only be used one at a time, or nondurable, meaning they are destroyed after consumption, allowing only one user to enjoy it

	Excludable	Non excludable
Rivalrous	Private goods food, clothing, cars, parking spaces	Common-pool resources fish stocks, timber, coal
Non- rivalrous	Club goods cinemas, private parks, satellite television	Public goods free-to-air television, air, national defense

a) Your Facebook page.

It is excludable since if my account is private, the people on Facebook who are not added in my list can not access my profile information. It is non- rival as my presence on Facebook does not reduce the space for any new user to make an account.

b) A seat at the final game of the NCAA men's basketball tournament (go Duke!)

It is excludable since people who have not purchased the ticket to the tournament can not attend it. It is rivalrous in nature as there are only limited number of seats in the tournament. A competition is created for their consumption and consumers, therefore, become rivals in an attempt to obtain them.

c) A pay-per-view movie on television.

It is excludable since the consumers who do not pay for the movie will not have access to it. It is non- rival in nature since payment by one consumer does not reduce the availability of the movie for another consumer.

d) Amazon's webpage.

It is non- excludable since it is an open access page. No consumer has to pay any charges to view the page. It is non- rival since its presence on the web does not reduce the availability of web space for any other creator.

e) Firefighting services.

In the conventional sense, firefighting services are considered public goods. Thus they are non- excludable and non- rival in nature although in the real sense they may be rivalrous to some degree due to constraints in simultaneously providing firefighting services to multiple consumers.

f) A trip to space on Virgin Galactic.

It is excludable and rivalrous both. It is excludable since it is bound to be expensive and only those consumers who pay for it will be allowed on board. It is rivalrous as it will have limited seats due constraints in seating capacity. Thus consumption by one individual will reduce the availability of seats for others.