The benefits are pure private. Public goods: examples. Pure and mixed public goods

Question 36 Justification of production volume and assessment of the effectiveness of assortment programs Analysis of the effectiveness of assortment programs is carried out according to the following indicators: level of fulfillment of the assortment plan, assortment renewal rate, percentage reduction

Examples of which will be given below represent values ​​consumed by all citizens collectively. Their use does not depend on whether the population pays for them or not. Next, we will consider in more detail public goods: the types and characteristics of these values.

General information

Private and public goods have significant differences. As mentioned above, the latter are used by all citizens collectively. The first ones are available for consumption and benefit their direct owner. Private and public goods differ in the matter of transactions with them. The latter are almost impossible to sell. Public goods and services are used by citizens with great pleasure. However, many individuals refuse to pay for their benefits.

Pure and mixed public goods

There are certain criteria according to which the classification of values ​​is carried out. Thus, there is a division into pure and mixed public goods. The first are those that have the characteristics of non-excludability and non-selectivity. The characteristics used in the classification may have different levels of manifestation. So, for example, two goods may have characteristics of non-selectivity and non-excludability, but one of them exhibits these characteristics to a lesser or greater extent. In addition, there is a combination of properties for a particular value.

Non-selectivity and non-excludability

Providing pure public goods to one individual is impossible without the participation of other citizens. The result is collective consumption. Each individual uses the benefits of the good. At the same time, the utility that other citizens derive from it does not decrease. No one can be excluded from using these public goods. Examples of this include the following: Each citizen benefits from the weather forecast without reducing the utility that others derive. The same applies to visiting libraries and driving on highways.

General categories

The following types of benefits are distinguished:

• Informational. These include “continuous” public goods. Examples: television, radio.
• Limited use. Such benefits are available to a certain number of consumers at one time. These include a road bridge during rush hour.
• Local. These are public goods available to representatives of an individual or region. Examples: regional libraries, parks, public gardens.
• Discrete (museum exhibits, paintings in galleries), free (activities of strongholds of law enforcement), with a negative (higher education, courses) and positive (public transport) price.

To provide the population with public goods, it is necessary to attract private ones. The volumes of the latter are limited by the total volumes, which are formed, in particular, due to the receipt of various fees and taxes.

Mixed blessings

There are quite a few subtypes in this category. As mentioned above, the characteristics characteristic of goods can be presented in one or another combination. Thus, inselectivity can be combined with exclusivity and vice versa. In this regard, we can name other examples of public goods. There are values ​​that are characterized by a low level of non-excludability and a high level of selectivity. They are called common (for joint consumption) goods. These include places on the free beach. They are available to all citizens. But at the same time, if one person takes a place on the beach, another person will not be able to use it. In this regard, it receives signs of selectivity. A feature of common goods is the fact that limiting their use is associated with significant costs. Most often they are provided at the local (regional) level. This category includes the following examples of public goods: parks, parking lots, and others. In this regard, they are also called “communal”. Shared consumption in this case determines a high level of competition regarding their use. We are talking about the principle “who came first, took advantage.”

Collective values

Not everyone clearly understands the existing division. Therefore, many consumers ask citizens who are more competent in this matter: “Give examples of public goods for collective use.” To begin with, it should be said that such values ​​are characterized by a low degree of selectivity and a high level of non-excludability. One striking example is obtaining information on the Internet. Many people can use this opportunity at the same time. from an increase in the number of consumers remains zero. This, in turn, means that competition (selectivity) in consuming this good is low. However, giving it a sign of excludability of labor does not constitute. This is achieved by introducing fees for connecting to the Internet. A feature of such goods is the possibility of restricting access to them at relatively low costs.

State support

The number of public goods is significantly less than the number of government goods. Many public goods are considered excludable or competitive in use, and in some cases have both of these characteristics. Here we can talk about the provision of secondary education. As the number of students increases, the costs are positive. This is due to the fact that the rest of the schoolchildren in this case will receive less attention due to their larger numbers. Moreover, such a benefit acquires the sign of excludability when tuition fees are introduced. If some of the students cannot contribute it, they will be excluded from the education process in this class.

Specifics of demand

The need for one or another good is based on the principle of decreasing. Due to the fact that this benefit from using an additional unit is decreasing, the line of individual demand has a downward slope. The demand curve for a private net good follows a similar pattern. However, behind this external similarity there are great differences hidden. First of all, the sale of pure public goods “by the piece” is impossible. This is due to the fact that they are considered inseparable and are used jointly by all people. Their consumption is not of individuals. These benefits can be used even by those who choose not to pay for them. In this case, no cost is assigned per unit, and consumers can use the entire volume of output. In other words, in a specific period of time they consume a single amount of the good.

Market mechanism

In some cases, its use can eliminate forced financing of the release of public goods. In such situations, they are supplied by individual farms. Financing is carried out using a market mechanism. It allows the implementation of such support methods as the exclusion of “free riders”, as well as mutual subsidies and financing. In the first case, restrictive measures are used that block access to consumption. Due to low costs in this case, a good, even if it is selective, can be sold in the same way as a private one.

Role of the State

The government incurs the costs associated with providing benefits to society when the external positive effects arising from their use cannot be internalized or are due to very large costs. Thus, the state can be directly a producer. For example, this could be fighting emergency situations or ensuring internal security. The government can also finance the production of goods by the private sector by participating in the construction of schools, hospitals and other things. In all cases, the receipt of funds from the state is carried out at the expense of taxes paid by citizens. The decision on the optimal production volume is based on collective action. When the state provides public goods, the effective volume of their production is not always achieved. The use of the tax mechanism requires solving a set of problems that are associated with achieving the required volume of output.

Public goods are goods, the benefit from the use of which is inseparably distributed throughout society, regardless of whether its individual representatives want or not to acquire this good. Public goods are paid for through general taxation. An example of a public good is the national defense system, because concerns everyone equally. There are pure private and pure public goods. A pure public good is a good that is consumed collectively by all people regardless of whether they pay for it or not. It is impossible to obtain 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. While efficient provision of public goods often requires government action, private goods can be allocated efficiently by the market. Therefore, a pure private good only benefits the buyer. A number of goods are neither purely private nor purely public. For example, the services of the police, on the one hand, represent a public good, but 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 indiscriminate consumption, meaning that for a given volume of a good, its consumption by one person does not reduce its availability to others. 2) consumption of pure public goods does not have the property of exclusivity in consumption. This means that consumers who are unwilling to pay for such goods cannot be deprived of the opportunity to consume them.

№55 Features of demand for public goods. Individual and public demand for public goods.

The demand curve for a pure public good is different from the demand curve for a pure private good. What they have in common is that they both have a negative slope.

Demand curve for a pure public good.

D= MSB=∑MPB, where MSB is the marginal social benefit from consuming the good, and MPB is the marginal private benefit from consuming the good. Thus, the demand curve for a pure public good is obtained by adding marginal private utilities.

Demand curve for a private good.

Qd=∑q i , where i =1…n

That is, we can say that for a pure private good, the total Volume demanded at each possible price value is equal to the sum of the individual volumes demanded.

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

56. Production of public goods. The role of the state in ensuring the supply of public goods.

The efficient output of net public goods (NPG) corresponds to the volume of output at which marginal social utility corresponds to marginal social cost (MSB=MSC. MSB=∑ MPB, where MPB is marginal private utility)

There is a tendency for consumers to avoid participating in the financing of the production of public goods or to minimize the associated costs in the hope that others will do so. This phenomenon is a problem "free rider" or "hares".The possibility of free consumption of public goods causes inefficiency in their production. The essence of the “free rider” problem is that in an effort to benefit from the efforts of other users, “hares” occupy the degree of marginal utility they receive from consuming a good, which leads to an understatement of the value of the public good and to a lower volume of its production compared to the effective one. You may encounter a situation where no one wants to pay and the provision of public goods becomes impossible. That. The essence of the problem is expressed in the fact that everyone is interested in consuming a public good, but no one wants to pay.

When the circle of consumers of a public good is large, and the propensity of each of them to pay for the good is deeply differentiated, overcoming the problem of “hares” by methods of exclusion either involves significant costs or leads to significant underproduction of the public good. Therefore, the only way to provide such public goods is the state. The forms of government participation 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 the private sector - garbage collection, some types of medical care. However, their essence is the same - the production of public goods provided through the state is financed by taxes collected forcibly from all citizens, as a method of solving the “free rider” problem.

The scale and 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 do not have a 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. In accordance with this, 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 benefit (utility) only to the economic entity that bought it for consumption. Other subjects cannot simultaneously receive utility (benefit) from consuming this good. For example, no one else benefits when a person eats the apple he bought.

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

Goods that are excluded goods and objects of competition in consumption are called pure private goods . The purchase of pure private goods does not generate 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, overloaded and limited goods.

Pure public goods - These are goods consumed by people collectively, regardless of whether they pay for it or not. A characteristic feature of such goods is non-competitiveness 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 and street lighting. It is impossible to exclude them from the sphere of consumption of these goods.

Purely public goods are national defense, lighthouses, basic scientific research, and anti-poverty programs.

A type of public good is excluded goods. These are insufficiently competitive or non-competitive goods. Excluded public goods include those for which a price can be set and access to their consumption can be limited for those wishing to do so. These include education and healthcare. Not everyone who wants to get a higher education is accepted into universities, i.e. they may be excluded from the process of consuming such a public good as higher education.

Overloaded public goods - These 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 country's citizens, provide a public good to the population. 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 provide a certain supply of tradable public goods if they are sufficiently excludable to establish prices for them. Most public goods are not provided by private markets due to a number of circumstances.

Consumption of public goods generates a positive external effect for third parties who receive free benefits 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 insufficiency. The market does not undertake the production of pure public goods.

If the market is not able to provide the supply of public goods in accordance with social need, then the state does this. It undertakes, 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 assign tasks for their production to private enterprises.

Ensuring the efficient or optimal volume of production of pure public goods is of utmost importance. This raises the problem of determining the demand for pure public goods. It differs significantly from the demand for a private good. A firm, organizing the production of pure private goods, is guided by the amount of market demand of consumers, which depends on the price of the good. As for a pure public good, there is no price for it, since it cannot be sold individually. Therefore, price cannot serve as an argument in the demand function, and consumers cannot adjust the quantity demanded in accordance with price. We have to focus on the needs of individuals for pure public goods. It is very difficult to obtain reliable information about the need for pure public goods, their quantity, and usefulness for consumers.

The public sector's costs of producing pure public goods are covered entirely by tax revenues. Some consumers, knowing that increased consumption of such goods will lead to higher taxes, downplay 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 its consumption or not. The problem of free use of such benefits is called freerider problems (free rider problem), or "free rider problem". Free riders, or “hares,” are people who benefit from the use of a pure public good, but seek to obtain it for free.

So, determining the 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, is downward sloping. 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. In Fig. 11.5 three consumers: Ivanov, Petrov and Sidorov - present a demand for different amounts of pure private good. Let us assume that at price P Ivanov buys three units, Petrov buys five, Sidorov buys eight units of the good. Volume of market demand Σ q i =16.

Rice. 11.5. Demand curves:

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

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

Economic agents adjust the volume of demand for a pure private good in accordance with their income and preferences. For pure public goods this is not possible, since all consumers must consume the entire output. If there are 16 units of a pure public good, its marginal utility in monetary terms for Ivanov is ( MV I ) will be 10 rubles, for Petrov ( MV P ) - 20, for Sidorov (MB C) - 32 rub. In Fig. 11.5 this is characterized by curves D AND , D P , D C. Curve D - MV D reflects the marginal utility of the entire available volume of pure public good. The marginal social benefit from consuming 16 units of pure public good is 62 rubles.

With a supply volume equal to 16 units of a pure public good, the volume of demand for this good is equal to the volume of its supply.

Is this volume optimal? To determine the optimal volume of supply of a pure public good, the principle of equality of marginal benefit to marginal cost is used. The optimal volume of production of a pure public good (Fig. 11.6) is achieved at point E, where the marginal social benefit from consuming the volume of the good Q E equals the marginal cost of producing a given pure public good at output Q E . At the point E :MSB(QE) = MS ( Q E). It is impossible not to take into account that, since when determining the demand for pure

public goods cannot benefit from price signals; estimates of the costs and benefits associated with the production of these goods are very approximate.

Rice. 11.6. Optimal amount of net public goods

When 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 options for solving the problem of producing pure public goods. Of course, these programs may not exactly meet the needs of an individual voter. The results of voting are significantly influenced by the amount of utility that voters can receive and the costs that take the form of taxes levied on the population. Programs designed to raise taxes are not popular with voters.

There are certain rules for how the “voting machine” works. The majority voting rule means that a decision is made by a simple majority of votes. The rule of unanimity (consensus) is that the decision must be made by all voters without exception. There is also a model of the median, or average, voter, according to which the optimal voting 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 (various methods of communication with government officials to pursue certain policies), logrolling (the practice of trading members of legislative bodies with their political votes).

Many government decisions produce different results than the original calculations. This is what economists discovered law of unintended consequences. This suggests that, under certain conditions, we can talk about 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.

It is not only externalities that cause the efficiency of market transactions to suffer. Much also depends on the properties of the goods and services that are exchanged in private markets. The main problem considered by economics is the problem of choice. Its severity is due to limited resources and the associated rivalry between market participants.

One of the properties of goods is competitiveness in consumption . Competition indicates that the consumption of a good by one subject excludes the possibility of its consumption by other subjects. However, in modern conditions there are many benefits that do not generate competition. An example of this kind is information, which does not decrease due to the fact that it is consumed by a large number of subjects. In this case, the absence of competition actually means that the provision of each additional unit of information is not associated with additional costs. Consequently, the marginal cost of goods that are not competitive in consumption is zero, and this does not at all imply that the total cost of providing them must also be zero. So, if the number of cars passing through the bridge increases, this will not lead to an increase in additional costs, from which it cannot be concluded that there are no costs for the construction of the bridge and the costs for its repair increase.

Another property of goods is a measure of subjects' exclusion from their consumption. The presence or absence of exclusive access to a particular good depends on the costs of providing it (access). For example, excluding third party access to any of the goods included in the group of consumer goods does not involve any costs, while excluding access to the road as a means of communication requires significant costs. Consequently, endowing a good with the property of exclusivity of access is actually associated with the value of exclusion costs.

Models of market types (perfect competition, pure monopoly, oligopoly and monopolitical competition) are based on the assumption that all goods sold in private markets are endowed with the properties of exclusivity and competitiveness in consumption. However, both of these qualities are simultaneously inherent in only one type of goods - pure private goods.

Pure private goods - these are goods that have the properties of competitiveness in consumption and exclusion of access. Their production and use assume the absence of external effects. All costs associated with production are borne entirely by the manufacturer, and all benefits accrue to the consumer (buyer). Examples of pure private goods are all goods of which each unit can be sold for a price.

Their complete opposite is pure public goods for which there is no exclusivity of access and competition in consumption. Consequently, a pure public good is indivisible and its production and consumption are accompanied by external effects (for example, protecting the population from the threat of external aggression). Indivisibility in consumption means that an individual cannot directly choose the amount of consumption of such goods. It involves the sharing of public goods, usually offered by the state. However indivisibility in consumption should not be confused with indivisibility in production.

The presence of non-rivalry and non-excludability properties of pure public goods gives rise to the problem of pricing. The effective price of a good is set at the level of marginal costs. Since nonrivalry in consumption means that the marginal cost of providing such goods is zero, the price would also have to be zero. But at a zero price, the manufacturer will not be able to cover production costs. Consequently, pure public goods cannot be sold in private markets. Therefore, benefits of this type are provided by the public sector (the state).

Table 13.1

Typology of goods

Some types of resources are characterized by virtually unlimited access to them by potential consumers. Such resources reproduce naturally, but overexploitation is detrimental to their productivity (for example, fish in the seas and oceans). However, free access of potential users to these resources is due to high costs, including monitoring compliance with the limited access regime. The latter is often associated with the formation of social institutions based on informal norms that consolidate the traditional regime of resource use. Thus, pastures are often collective property.

In addition to pure private and pure public goods, there are mixed goods. A typical example of a mixed good (excludable, but not competitive in consumption) are the benefits of natural monopolies. The effectiveness of natural monopolies depends on the size of the firm. The larger the production, the lower its average costs, since fixed costs are spread over a larger volume of sales. Natural monopolies include the metro, radio broadcasting, power grids, etc.

Collective goods- these are goods and services that have the properties of mixed goods and are provided to a limited number of individuals for the reason that the amount of a good offered to any one individual cannot be changed independently of the others. Such mixed collective goods are otherwise called club goods; their consumption is based on the club's distribution principle: the overhead costs arising from the provision of these goods are distributed to each individual consumer. Collective goods are similar to the benefits of natural monopolies, on the one hand, by the presence of restrictions on access to the good for those consumers who are not members of a particular community, and on the other hand, by the lack of competition in the consumption of these goods.

There are two types of collective goods. The first type occurs when a coalition is created to provide its participants with a collective good, while other consumers are excluded from the number of potential users (for example, a closed sports club). The second type occurs when the coalition formed to provide the benefit is part of a larger group but has special motives that distinguish it from the rest of the collective. In this case, the coalition is not able to exclude other members of the main group from among the consumers of the collective good (for example, an association of town residents to plant greenery on their street).