Public goods and common resources are two important concepts in economics that often get confused. Let’s break down the differences between them.
Public goods are those that are non-excludable and non-rivalrous. This means that once they are provided, no one can be excluded from using them, and one person’s use of the good does not reduce its availability to others. Classic examples include national defense, public parks, and street lighting. These goods benefit everyone, but they often suffer from the ‘free rider’ problem, where individuals may choose not to pay for the good since they can still access it without contributing.
On the other hand, common resources, or open access goods, are non-excludable but are rivalrous. This means anyone can use them, but one person’s consumption of the resource diminishes the availability for others. A typical example would be fish stocks in the ocean or grazing land for livestock. While anyone can access these resources, their overuse can lead to depletion, resulting in what is known as the ‘tragedy of the commons.’ Therefore, common resources require careful management to avoid over-exploitation.
In summary, the key difference lies in their rivalry status: public goods are non-rivalrous, while common resources are rivalrous. Understanding this distinction is crucial for effective resource management and policy making.