public goods. Properties of Public Goods

A pure private good is a combination of competitiveness and exclusivity. A pure public good has two properties at the same time - non-rivalry and non-excludability. AT real life The pure private good and the pure public good can be thought of as the extreme poles of the scale of economic goods, between which there are mixed goods of various kinds, the proximity of which to one or another pole is determined by the dominance of the properties of the private or public good. If pure public goods are characterized by perfect irreducibility and irreducibility of their consumption and use, then mixed goods are characterized by varying degrees of exclusion and partial diminution in the process of their consumption.

Mixed good as opposed to pure good is an excludable public good, a benefit of joint consumption with selectivity, alternativeness of its use, with a decrease in its consumption. A mixed good can be an object of sale, i.e., be paid.

A type of excluded mixed good is an overloaded public good. It is non-excludable up to a certain threshold level, after which there is a shortage of this good for everyone, i.e. its overload. The use of a good beyond the threshold level by one person excludes another from consumption or reduces the possibility of consumption of such a good by another. Highways, bridges, and tunnels are typical examples of transshipable public goods. Up to a certain level, the utility of these goods remains the same for all consumers, and additional consumers do not worsen the position of other users. Here the problem of excess consumers is not worth it. However, starting at some point, such as when using highways during rush hours, the addition of additional consumers leads to traffic jams, reduced speeds, increased traffic hazards, and other inconveniences to others.

An overloaded public good, to a certain level, has the properties and features of a pure public good; access to it is free for all members of society. Beyond this level, it has the properties and features of a paid private good. By establishing a fee for the provision of congested public goods, the supply and demand for these goods are regulated and the rational use of the material and technical base for the production of such public goods is ensured, as well as their high quality is maintained.

Another type of mixed good is the restricted sharing good, commonly referred to as the club good. Here the principle of exclusivity does not apply to an individual, but to a group of people. Access to the consumption of this kind of mixed goods is limited by statutory requirements and membership fees. Typical examples of limited access mixed benefit organizations include interest clubs (such as a tennis club), voluntary homeowners' associations, and other self-governing community organizations. Here, the object of exclusion is not an individual member of society, not an individual consumer, but communities of people and a group of consumers.

Classifications (groupings) of public goods are made not only taking into account the possibility of exclusion and the degree of use (including diminishing consumption) of these goods, but also taking into account the criterion of external (external) effect. It can be positive (for example, the effect of raising the educational level of the population, improving health, developing science and culture, etc.) and negative (for example, damage environment and health of people in connection with the introduction of environmentally imperfect industries and technologies).

Externalities differ in the scale and duration of their impact. The combination of externalities, taking into account their scale and time lag of impact with public goods, makes it possible to distinguish the following types of pure public goods:

• - a pure public good, the external effect of which is of national and global significance (for example, discoveries in the field of fundamental science, world masterpieces of literature and culture, national standards, satellite communications, etc.);
• - pure public goods with regional and local effects (eg local radio and television, municipal police, fire department, recreational facilities, etc.).

The external effect can be combined with the excludable benefit of joint consumption and, in this regard, the following are distinguished: a socially significant good (a well-deserved good) and a good created in industries with a natural monopoly. Socially significant benefits include education, health care, culture and services of other sectors of the socio-cultural sphere.

A socially significant good has the properties of a private excluded good and the properties of a public good due to a positive effect. The contradictory nature of a socially significant good creates an objective basis for a conflict between current individual and long-term public preferences regarding the consumption and use of such goods. There is a need for state intervention to resolve this conflict in favor of public preferences and establish a mandatory order for the consumption of socially significant benefits. In accordance with the Constitution in modern society compulsory general education was introduced and a mandatory level of health care and social security was established. The state is forced to limit the freedom of consumers in order to protect them from themselves. Otherwise, with the freedom of consumer choice, there are no guarantees that a certain group of citizens will not prefer to spend their money on current consumption, rather than on education and other socially significant benefits. With the help of state paternalism, it becomes possible to mitigate the irrationality of individual consumer behavior. However, with the expansion of the sphere of socially significant benefits, with the inclusion in this sphere of transfer payments focused on a fair distribution of income, social stability, equality of opportunity, equal access of all members of society to socio-cultural services, there is a danger of establishing paternalistic despotism. According to the American professor J. Stiglitz, in conditions when the state assumes a large amount of paternalistic responsibility, one group of citizens can impose their will and preferences through power structures on other segments of the population, as well as their views on how to behave and what consume.

The benefits created in natural monopoly industries are excludable benefits of shared consumption, they are usually called quasi-public goods. These goods have more properties of a private good and less characteristic properties of a public good. The industries of natural monopoly include municipal production and supply of the population with electricity, gas, water, heat, as well as communications and transport, etc. The peculiarity of these industries is the large-scale production and high capital intensity, which requires significant initial capital to enter these industries. new competitors. This protects the market for products of natural monopolies from potential competitors.

In the branches of natural monopoly, the chances are more favorable for the enterprises operating there than for new forms. The former, compared with the latter, win in the price competition due to the use of capacity reserves and the activation of the economies of scale factor.

Another feature of natural monopoly industries is the transmission technology (network type of production), which excludes duplication and disaggregation, and this, consequently, hinders the creation of a competitive environment. Industries with a natural monopoly are collective industries. Along with production of a transmission, network nature, they include production and technological, economic structures of the usual type, the services and products of which are classified as private goods. Varieties of natural monopoly are unique Natural resources requiring a common, joint disposal, as well as a monopoly on an intellectual product (in particular, intellectual property rights).

The joint nature of the consumption of public goods determines the unity in the application of criteria for distinguishing public goods of various types and private goods. At the same time, this indicates the commonality of the state and public voluntary sectors, their belonging to a single social economy.

Foreign statistics give an approximate idea of ​​the relationship between various types public goods based on data on specific public expenditures for their production So, in the late 80s. in the United States, the share of public spending in gross domestic product (GDP) for net public goods was 9.1%, for socially significant goods - 6.1, and with the inclusion of social transfer payments - 17.8, for quasi-public goods - 4.5% (for production infrastructure and natural monopoly industries).

In Germany, in the same period, 8.2% of GDP was spent on net public goods, 31.2% on socially significant goods (including social transfers), 13.3% on socially significant goods proper, and 4.6% on other public goods. %. A similar picture is observed in other industrialized countries. It testifies that socially significant benefits are in the first place in public expenditures, pure public goods are in the second place, and other types of public goods are in the third place.

Public goods are goods, the benefits from the use of which are inseparably distributed throughout society, regardless of whether its individual representatives want to acquire this good or not.

Public goods are paid for by general taxation rather than being bought by individual consumers in the market. An example of a public good is the national defense system, since it concerns everyone and everyone equally.

Note that in addition to public goods, there are also public "anti-benefits" - public goods that evenly impose costs on a group of people. These are unwanted by-products of production or consumption: the greenhouse effect, in which the burning of minerals threatens global climate change; pollution of air, water and soil by waste chemical industry, energy production or vehicle use; acid rain; radioactive releases from nuclear weapons testing; thinning of the ozone layer.

There are pure public goods and pure private goods.

A pure public good is a good that is consumed collectively by all people, whether they pay for it or not. It is impossible to derive utility from the provision of a pure public good by a single consumer.

A pure private good is a good that can be shared among people in such a way that there is no benefit or cost to others.

If the efficient provision of public goods often requires government action, then private goods can allocate the market efficiently.

Therefore, a pure private good brings utility only to the buyer.

A number of goods are neither purely public nor purely private. For example, police services, on the one hand, are a public good, and on the other hand, by solving burglaries, they provide a private service to a specific person.

Pure public goods have two main features.

1. Pure public goods have the property of non-selectivity in consumption, which means that for a given amount of the good, its consumption by one person does not reduce its availability to others.
2. The consumption of pure public goods does not have exclusivity in consumption, that is, it is not an exclusive right. This means that consumers who are unwilling to pay for such goods cannot be prevented from consuming them. A pure public good cannot be produced in "small portions" that could be sold through a cash machine.

The demand curve for a pure public good is obtained by adding up its individual marginal utilities to all consumers at each possible price, which implies vertical summing of individual demand curves.

The demand curve for a pure public good, like the demand curve for a pure private good, has a downward slope. However, the demand curve for a pure public good differs from the demand curve for a pure private good in two ways. The first is that the price is not a variable on the vertical axis, since one cannot set a price for an individual unit, since its consumption is not an exclusive right. The second difference is that in the case of a pure private good, people adjust the quantity demanded to suit their tastes and their economic situation. For a pure public good, this is not possible because there is no price assigned to the unit of this good. All consumers must consume the entire volume of production. Therefore, for any volume of supply, the volume of consumption of such a good by each consumer must be equal to the volume of supply.

On fig. Figures 49.1 and 49.2 show the differences between the demand curves for a public and private good.

For a pure private good, the total quantity demanded at each possible price is equal to the sum of the individual quantities demanded:

Qd = Sum (qi)

where i = 1,...,N.

The demand curve for a pure private good is obtained by adding the quantities demanded for each price along the horizontal axis.

The demand curve for a pure public good is obtained by adding the marginal utilities for each quantity along the vertical axis. Each consumer always consumes the same amount of the good.

For the definition of the optimal volume of production of public goods, see below.

G.C. Vechkanov, G.R. Bechkanova

PROPERTIES OF PUBLIC GOODS.

The classification of economic goods in terms of the possibility of their production by a market system is based on two criteria:

Exclusivity- the degree of availability of the good in consumption.

Selectivity- the nature of the distribution of the utility of the good among consumers in the process of its consumption.

According to these criteria, there are:

1. pure private good- a good that is available in consumption and brings utility only to its owner.

Most economic goods are of this type, they can be valued and sold piece by piece to the individual consumer, so pure private goods can be produced by the market system in optimal quantities.

2. Pure public good- a good, the provision of which to an individual is impossible without the provision of others and consumed jointly.

Pure public goods include national defense, the elimination of environmental and man-made disasters, lighthouse services, etc. These benefits have specific properties:

a) absolute non-selectivity (non-competitiveness) in consumption means that the receipt of benefits from the consumption of the good by one subject does not limit the possibility of obtaining the same benefits for others, and the marginal cost of providing the good to an additional consumer is equal to zero;

b) absolute non-excludability in consumption means that it is impossible to prevent anyone from participating in the consumption of the good, it is indivisible and consumed together.

Since there is a free-rider problem with respect to public goods, i.e. benefits from their consumption are received by persons who did not bear any costs for their production and did not participate in paying for them, insofar as the market system cannot give them a monetary value and, therefore, does not produce them at all.

3. Mixed (quasi-public) goods - goods and services, in relation to which the principle of exclusion of consumption can be applied, i.e. a price can be set, however, their consumption is accompanied by large external benefits, and their production has negligible marginal costs. A special group of mixed goods are quasi-public, socially significant or worthy benefits. These are goods, the consumption of which is considered desirable, based on the political or social goals of society.

Mixed (quasi-public) goods include fire protection and public safety, industrial and social infrastructure services, fundamental science, etc. The production of these goods is characterized by high transaction costs, especially by the large amount of necessary capital investments, large capital intensity, slow capital turnover and low profitability, which makes it unprofitable for private capital. Therefore, mixed goods are produced by the market system in insufficient quantities.

The production of socially significant goods and services, which are classified as pure public and quasi-public goods, is organized by the state.

2. FEATURES OF DEMAND FOR PUBLIC BENEFITS.

EFFECTIVE VOLUME OF PRODUCTION OF PUBLIC BENEFITS.

Individual demand for a pure private good at a given price P 1 has a different value for different consumers in accordance with differences in the individual assessment of the marginal utility of the good. So market demand curve for a private net good D n is determined by horizontal summation of individual demand curves.

A feature of a pure public good is its indivisibility, a given volume of the good Q n must be fully consumed jointly by all consumers. At the same time, each consumer estimates the marginal utility of a given amount of a good in different ways and is ready to pay a different price for it. So total demand curve for a net public good D n , reflecting the marginal social benefits (MSB) is determined by vertical summation of individual demand curves reflecting marginal private benefits (MPB)

The effective volume of production of a net public good Q* is achieved when the marginal social benefits from consuming the good are equal to the marginal social costs of its production (MSB = MSC). At the same time, none of the consumers is ready to pay for this volume at the price P*, therefore, achieving the optimal volume Q* requires financial cooperation of consumers.

Distinguish between pure private and pure public goods. pure private good- good, each unit of which can be sold for a fee. It has the properties of competitiveness in consumption (one subject excludes the possibility of consumption by others) and exclusivity of access. All production costs are borne by the producer, and all benefits accrue to the consumer. Their complete opposite is pure public goods. Pure public good- a good that is consumed collectively by all people, regardless of whether they pay for it or not. They do not have a monetary form of expression, which means that they cannot be produced directly by the market.

OB properties: non-excludable (consumed by all individuals), non-competitive in consumption (consumption by one person does not reduce their availability for others), the production of OB is provided by the state, the volumes of individual consumption of OB are equal to m / y and correspond to the aggregate supply. A good is not competitive in consumption if, at any given level of its quantity, the marginal cost of producing it for an additional consumer is zero. A good is non-excludable if the cost of removing individuals from consuming it is very high.

Types of ABOUT: overloaded(goods, the non-competitiveness of which in consumption remains only within a certain number of consumers - a visit to the park; consumption can be selective), excluded(collective - mixed – goods with a high degree of exclusion and a low degree of selectivity - cinema, education).

49. Features of the demand for public goods. Individual and public (total) demand for public goods.

The demand for a public good is determined under the condition that it is possible to identify the preferences of all consumers and all consumers are willing to pay for the provision of each additional unit of the public good.

The demand function for OB has the form of the head of the marginal benefit received by the individual from the volume of consumption of the good.

marginal benefit(MB) - the utility received by an individual from the consumption of an additional unit of OB, and, accordingly, the individual's willingness to pay for this additional unit.

The demand curve for OB has a negative slope, which reflects the general pattern of decreasing marginal utility from each additional unit of the good.

When plotting a curve total demand it must be taken into account that the price of general demand is the sum of individual demand prices, since OB has the property of non-competitiveness in consumption - it is indivisible. Each individual consumes the entire volume of OB, and not some part of it. To determine the total marginal benefit (MSB) of a given good, it is necessary to add up the marginal individual benefits of all consumers. The volume of OB consumption by each consumer, then it will be equal to the volume of OB offered to him.

50. Production of public goods through the cooperation of commodity producers (private supply of public goods) and the problem of free riders. The role of the state in ensuring the supply of public goods. Optimal output of a public good.

OB production is efficient if the total marginal benefit to consumers is equal to the marginal cost of production (MSB = MSC) or the price at which the producer is willing to offer a given amount of OB.

The non-excludability of OB creates the possibility of evading the contribution by certain individuals when consuming it. The problem of free riders- the difficulty of implementing mutually beneficial collective actions due to the possibility of obtaining economy. agents benefit without sharing in common costs. The larger the size of the group, the less part of the total benefit goes to the average member and, accordingly, the less incentives he has to actively engage in providing the entire group with a collectively provided good and participate in collective actions, and consequently, the more acute the problem of “free riders” becomes for the group. .

To eliminate the problem of free riders, tax prices (Lindahl model) or Clark tax (from the dominant consumer) are introduced. The proposed measures do not fully solve the problem of evading payment for the provision of OB, therefore, the effective production of OB is financed by the state. The forms of participation of the state in the provision of public goods can be different, from the direct production of goods - national defense, fire protection, to the financing of public goods produced by a private structure - garbage collection, some types of medical care. But in both options, the solution of the question of the optimal volume of OB production is based on collective actions.

The scale and degree of intensity of external effects existing in the economy are different. The strongest externalities come from the production and consumption of so-called pure public goods. Externalities arise because these goods have no price.

The world of economic benefits is diverse. Their differentiation into separate types is carried out on the basis of such criteria as competitiveness in consumption and exclusion from consumption. Accordingly, a distinction is made between private and public goods.

private goods - these are goods, each unit of which can be sold at a market price and, being consumed by one person, they cannot be simultaneously consumed by other persons. They bring benefits (utility) only to the economic entity that bought it for consumption. Other subjects cannot simultaneously receive utility (benefit) from the consumption of this good. For example, no one else benefits when a person eats an apple he has bought.

Anyone who cannot or does not want to buy this or that good is excluded from the number of recipients of benefits brought by the consumption of the good. Consumers compete for a certain amount of such goods.

Goods that are excluded goods and objects of rivalry in consumption are called pure private goods . The purchase of pure private goods causes no externalities for third parties.

public goods - these are benefits, the provision of which to an individual is impossible without providing them to other persons, and without additional costs. Public goods are divided into pure, non-excludable, excludable, congested and limited goods.

Pure public goods are goods consumed by people collectively, whether they pay for it or not. characteristic feature such benefits is non-rivalry in consumption. The use of a good by one person does not reduce the possibility of its consumption by other individuals.

Non-excludability from consumption - a situation where no one can be prohibited from using a good, even those who cannot pay for it. Thus, all citizens of the country enjoy such benefits as national defense, street lighting. It is impossible to exclude them from the sphere of consumption of these goods.

Purely public goods are national defense, lighthouses, fundamental Scientific research, anti-poverty programs.

A type of public good is excluded benefits. These are insufficiently competitive or non-competitive goods. Excluded public goods include those for which you can set a price and restrict access for those who wish to consume them. These include education and healthcare. Not everyone who wants to get higher education are admitted to universities, i.e. they may be excluded from the consumption of such a public good as higher education.

overloaded public goods are goods that can be consumed by everyone, provided that they are available in sufficient quantities for everyone. Examples of such public goods are roads, public libraries.

To limited public goods include those that are neither purely public nor purely private. For example, the police, which ensure the public safety of the citizens of the country, provides the population with a public good. By solving specific crimes, it provides private services to individual subjects. Education, which has the characteristics of a public good, is also provided by private firms.

In the market sector, it is possible to produce excludable public goods if restricting access to them is associated with relatively low costs. The market can supply, to some extent, congested public goods if they are excludable enough to be priced. Most of the public goods are not provided by private markets due to a number of circumstances.

The consumption of public goods generates a positive externality for third parties who receive a free benefit from their consumption, but it is not taken into account when the company produces or sells the good. Hence, there is an underproduction of public goods by private producers, i.e. the production of public goods is a potential source of market failure, disruption or failure. The market does not take over the production of pure public goods.

If the market is not able to provide the supply of public goods in accordance with social needs, then the state does it. It takes over, in whole or in part, the production of public goods: national defense, education, health care, etc. The production of pure public goods is carried out in the public sector of the economy. The state, determining the volume of production of pure public goods, can give a task for their production to private enterprises.

Exclusively importance has to ensure the efficient or optimal production of pure public goods. This raises the problem of determining the demand for pure public goods. It differs significantly from the demand for a private good. The firm, organizing the production of pure private goods, focuses on the value of the market demand of consumers, which depends on the price of the good. As for the pure public good, there is no price for it, since it cannot be sold by the piece. Therefore, the price cannot be an argument in the demand function, and consumers cannot adjust the quantity demanded in accordance with the price. We have to focus on the need of individuals for pure public goods. Reliable information about the need for pure public goods, their quantity, utility for consumers is very difficult to obtain.

The costs of the public sector for the production of pure public goods are entirely covered by tax revenues. Some consumers, knowing that increased consumption of such goods will lead to higher taxes, underestimate the marginal benefit from their use or argue that they do not need such a good. In effect, they benefit from a pure public good, whether they pay for it or not. The problem of free use of such benefits is called freerider problems (free rider problem), or "free rider problems". Free riders, or "hares", are people who benefit from the use of a pure public good, but strive to get it for free.

So the definition of demand for purely public goods has distinctive features. The demand curve for a pure public good, like the demand curve for a pure private good, has a downward slope. However, the demand curve for a pure private good is obtained by adding the quantities demanded by individual producers (at each price) along the horizontal axis. On fig. 11.5 three consumers: Ivanov, Petrov and Sidorov - present a demand for a different amount of pure private good. Suppose that at the price P Ivanov buys three units, Petrov buys five, Sidorov buys eight units of the good. Market demand volume Σ qi =16.

Rice. 11.5. Demand Curves:

a - for a pure private good; b - for the pure public good

The demand curve for a pure public good is constructed by vertically adding up its individual marginal benefits (utilities) for each consumer.

Economic agents adjust the demand for a net private good according to their income and preferences. For pure public goods, this is not possible, since all consumers must consume the entire output. In the presence of 16 units of a pure public good, its marginal utility in monetary terms for Ivanov ( MV I ) will be - 10 rubles, for Petrov ( MV P ) - 20, for Sidorov (MB C) - 32 rubles On fig. 11.5 this is characterized by curves D and , D P , D C. Curve D - MW D reflects the marginal utility of the total amount of the net public good. The marginal social benefit from the consumption of 16 units of a net public good is 62 rubles.

With a supply of 16 units of a net public good, the quantity demanded of that good is equal to the quantity supplied.

Is this volume optimal? To determine the optimal supply of a pure public good, the principle of equality of marginal benefit to marginal cost is used. The optimal amount of production of a net public good (Figure 11.6) is reached at point E, where the marginal social benefit from consuming the amount of good Q E is equal to the marginal cost of producing a given net public good at output Q E . At the point E :MSB(QE) = MS ( Q E). One cannot ignore the fact that, since in determining the demand for net

public goods cannot be used by price signals, estimates of the costs and benefits associated with the production of these goods are very approximate.

Rice. 11.6. The optimal amount of net public goods

Determining the volume of production of pure public goods, the state takes into account the preferences of citizens. They are identified by voting for candidates who offer the most acceptable solutions to the problem of producing pure public goods. Of course, these programs cannot exactly meet the needs of an individual voter. The results of voting are significantly affected by the amount of utility that voters can receive and the costs that take the form of taxes levied on the population. Tax-increasing programs are not popular with voters.

There are certain rules for the operation of the voting machine. The rule of voting by majority means that the decision is made by a simple majority of votes. The rule of unanimity (consensus) is that a decision must be made by all voters without exception. There is also a model of the median, or average, voter, according to which the voting optimum is achieved in accordance with the interests of the average voter, i.e. occupying a place in the middle of the scale of interests of a given society.

However, this does not mean that, under this condition, efficiency in the production and consumption of pure public goods will be achieved in practice. The fact is that government programs and projects can be used to achieve personal goals, in the interests of certain groups of people. They resort to lobbying different ways communication with government officials to carry out certain policies), logrolling (the practice of trading members of legislative bodies with their political votes).

Many government decisions give different results than the original calculations. This is open economists law of unintended consequences. This suggests that, in relation to certain conditions, one can speak of failures not only of the market, but also of the state. To achieve an efficient volume of production of pure public goods, the efforts of the state and the market must be combined.