How do non-excludability and non-rivalry define public goods?

Non-excludability and non-rivalry define public goods as resources accessible to all and not depleted by individual use.

Non-excludability refers to the fact that once a public good is provided, no one can be excluded from using it. This is because public goods are typically provided by the government or other public entities, and their use is not restricted to paying customers or specific groups of people. For example, once a public park is established, anyone can enjoy its facilities, regardless of whether they have contributed to its maintenance or not. This characteristic often leads to what economists call the 'free-rider problem', where individuals benefit from a good without paying for it, leading to potential under-provision of the good.

Non-rivalry, on the other hand, means that one person's use of a public good does not reduce its availability to others. In other words, public goods are not depleted by individual consumption. For instance, when one person listens to a public radio broadcast, it does not prevent others from doing the same. This is in contrast to private goods, where consumption by one individual reduces the amount available for others.

Together, non-excludability and non-rivalry define the unique nature of public goods. They are resources that are available to all members of a society, regardless of their contribution to its provision, and their use by one individual does not diminish their availability to others. This sets public goods apart from private goods, which are both excludable and rivalrous, and club goods, which are excludable but non-rivalrous.

Understanding these characteristics is crucial for policy-making. Since public goods are susceptible to free-riding and under-provision, governments often need to intervene to ensure their availability. This might involve direct provision of the good, or the use of taxes or other mechanisms to fund its production and maintenance. Therefore, the concepts of non-excludability and non-rivalry are fundamental to the study of public economics and the role of government in the economy.