Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 4 The Economics of the Public Sector
Chapter 11 of 36 Public Goods and Common Resources
Section 3 of 14
…
Figure 1 - Four Types of Goods
Goods can be grouped into four categories using two characteristics.
-a good is excludable if people can be prevented from using it
-a good is rival in consumption if one person's use of the good lessens other people's use of it.
…
How well markets work to provide the goods people demand depends on the type of good.
A market is able to provide the efficient number of ice-cream cones.
The movable price of ice-cream cones balances supply and demand at an equilibrium.
At equilibrium the sum of producer and consumer surplus is maximized.
…
Figure 1 assigns goods to four categories using these two characteristics
-A- Private Goods are excludable and rival in consumption.
An ice-cream cone is excludable
· because it is possible to prevent someone else from eating it
· the current owner of the cone can decide whether to give or sell it to them
An ice-cream cone is rival in consumption
· because if one person eats an ice-cream cone
· another person cannot eat the same cone
Most goods in an economy are private goods
· you don't get the good unless you pay for and receive it
· you own it and are the only person who benefits
In free market supply and demand analysis, the assumption is the good is both excludable and rival in consumption.
…
-B- Natural Monopolies, good is excludable, not rival in consumption.
Consider fire protection service in a small town.
· excludable, the fire department can just let a house burn down if protection not paid for in advance
· not rival in consumption, once a town has a fire department, the additional cost of protecting one more house is small
…
-C- Common Resources are not excludable, are rival in consumption.
Fish in the ocean
· are not excludable, it is difficult to stop fishermen from taking fish out of the ocean
· are rival in consumption, when one person catches a fish there are fewer fish for others to catch
…
-D- Public Goods are not excludable, not rival in consumption.
· people cannot be prevented from using a public good
· one person's use of a public good doesn’t reduce another person's potential use of it
A public park is a public good
· not excludable, cannot prevent any single person from using it
· not rival in consumption, when one person gets the benefit of walking in the park, they do not reduce the possible same benefit to anyone else
… …
public park
kōkyō kōen [ō is a long o, sounds like “ou”]
公共公園

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