Classifying goods by rivalry and excludability

The two tests. Every good is sorted by two questions:

• Is it rival? A good is rival when one person's use leaves less of it for others; it is non-rival when one person's use does not reduce what is available to others.
• Is it excludable? A good is excludable when people who do not pay can be kept from using it; it is non-excludable when keeping them out is impossible or extremely costly.

The four classes follow: private goods are rival and excludable; public goods are non-rival and non-excludable; common resources are rival but non-excludable; club goods are non-rival but excludable. These lines are not fixed for all time: the same good can move between classes when it becomes crowded or when a fee is charged.

(a) Street lights in a city: public good. One more person walking under a lit street does not dim the light for anyone else (non-rival), and no one can be kept out of the light on a public street (non-excludable). Street lights are a standard example of a non-excludable good.

(b) A toll road that is seldom congested: club good. Because the road is rarely crowded, one more car does not slow the others, so use is non-rival. The toll booth keeps out anyone who does not pay, so it is excludable. Non-rival but excludable is a club good; the source notes that a toll makes a road excludable.

(c) A public park that gets crowded on weekends: common resource (at weekends). Entry is free, so no one can be kept out: the park is non-excludable. On weekdays it is non-rival, so it is then a public good. At weekends, crowding means each extra visitor reduces the space and quiet available to others, so it becomes rival. Rival and non-excludable is a common resource; congestion is exactly what turns a public good into a rival one.

(d) Cable TV: club good. The cable company can cut off any household that does not pay its monthly fee (excludable), but one more household watching a channel does not reduce the picture for other subscribers (non-rival). It is a club good, like any subscription service that can switch off non-payers.

(e) A local fishery open to every fisherman: common resource. Every fish caught by one boat is a fish another cannot catch (rival), and since the fishery is open to all, no fisherman can be kept out (non-excludable). A village pond with fish open to every villager is the standard example of a common resource.

Summary.