The Conceptual Overlap Between Public Goods, Externalities And Merit Goods

Abstract

In a given situation, any good has the following characteristics: rivalry, exclusion, space, and time. The last two characteristics of a good are the usual physical variables of position in space and time. Rivalry may be seen as an intrinsic physical quality of any good and appears as a binomial variable with the categories yes and no, usually denominated as rival and non-rival. Exclusion reflects the institutional handling of the allocation of a good and appears as a continuous variable that measures the resource cost for enforcing property norms. In a continuous transaction cost function, non-rivalry is only one of the elements that affect its shape and the productivity of the necessary inputs for exclusion.