Question

What are the 4 types of goods? For each one, say whether they are excludable and whether they are rival in consumption.

Answer 1

In economics, goods can be categorized in many different ways. One of the most common distinctions is based on two characteristics: excludability and rivalrousness. That means we categorize goods depending on whether people can be prevented from consuming them (excludability) and whether individuals can consume them without affecting their availability to other individuals (rivalrousness).

Based on those two criteria, we can classify all physical products into four different types of goods: private goods, public goods, common resources, and club goods.

Private Goods are excludable, competing products. They need to be bought before they can be eaten up. And someone who is unable to afford private products is exempt from their use. Equally, an individual's consumption of private goods prohibits others from purchasing the same goods. Private goods are also known to be competing goods too. Examples of private products are ice cream, bread, homes, vehicles, etc.

Public goods describe products that are non-excludable and non-rival. This is, no one can be stopped from consuming them, so individuals can use them without limiting their availability to other citizens. Public benefits examples include fresh air, information, national security, street lighting etc.

Common resources are described as non-exclusive but rival items, or resources. Which means which practically everyone can use these. However, if one person consumes that resources, there is a reduction in their availability to others. Combining these two characteristics frequently leads to overuse of can resources (see also Commons Tragedy). Examples of raising resources include freshwater, fish, forest, pasture and so on.

Club goods are products that are excludable but non-rival.. Individuals can thus be discouraged from consuming them, but their use does not limit their availability to other citizens (at least before an overuse or congestion point is reached). Sometimes, club products are often considered artificially limited commodities. Natural monopolies also have these. Membership products include cable TV, cinemas, wireless internet, toll roads etc.