What characterises a public good in microeconomics?

A public good in microeconomics is characterised by non-excludability and non-rivalry in consumption.

In more detail, public goods are a fundamental concept in microeconomics and are defined by two main characteristics. The first is non-excludability, which means that once a good is produced, no one can be excluded from using or benefiting from it. This is because public goods are typically provided by the government and funded by taxpayers, so they are available to everyone regardless of whether they have paid for them or not. Examples of non-excludable goods include public parks, street lighting, and national defence.

The second characteristic is non-rivalry in consumption. This 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 additional users. For instance, when one person enjoys the view of a public park, it does not prevent others from doing the same. Similarly, when one person benefits from national defence, it does not reduce the level of protection available to others.

It's important to note that not all goods provided by the government are public goods. For a good to be considered a public good, it must satisfy both non-excludability and non-rivalry. If a good is excludable but non-rivalrous, it is considered a club good. If it is non-excludable but rivalrous, it is a common resource. And if it is both excludable and rivalrous, it is a private good.

Public goods present a challenge in economics because they often lead to what is known as the free-rider problem. Since people can benefit from public goods whether they pay for them or not, they have an incentive to avoid paying and instead free-ride on the contributions of others. This can lead to under-provision of the good, as the cost of providing it is not fully covered by those who benefit from it. This is why public goods are typically provided by the government, which can fund their provision through taxation.