Difference between Public Goods and Private Goods

What are Private Goods?

Any goods which are meant for consumption

of a particular individual or group of individual

and

other person are restricted from using it

Example

Suppose a person purchase a car

Only that person has right to use that car

Any other person can't use the car without his permission

Hence, car is a Private good

Note-

All products purchased households and business are private goods

Example - Clothes, Vehicles, TV, Mobile etc

What are Public Goods?

Public goods are goods which are available for consumption to all members of society

All people are free to use it

Example

Roads, Bridges etc

In this case, all members of public are free to use these roads and bridges

So it is a Public Good.

Important Points of Public Goods

They are Non Rivalrous

One person can increase his satisfaction from goods without reducing satisfaction of other person from the same goods

Example- Any person can use the road any number of time, it does not affect other person's use of road

They are Non Excludable

No person can be excluded (stopped) from using the goods

Example- A road prepared by govt can be used by anyone

Generally Provided by Govt

Since these goods are non rivalrous and non excludable (free to use for anyone), it is difficult to collect fees for same

Hence, it is not profitable to make these goods for Private enterprises

So these goods are generally provided by Govt in budget

Difference between Private Goods and Public Goods

What is Meaning of Public Provision?

Public Provision means provisions for goods and services which are financed by Govt Budget and they are free to use by any person

In easy language, It means those goods and services which are provided free of cost to everyone by the govt.

Example

Public Goods like Bridges, Dams etc are provided free of cost by Govt by making a provision for them in budget

Note

Goods may be produced by public sector or private sector

Money is paid by govt for the same

Difference between Public Provision and Public Production

NCERT Questions

Question 1

Explain why public goods must be provided by the government.

Other Books

Question 1

In the following questions, select the correct answers:

Which of these is not a point of difference between public and private goods?

1. Public goods are non-profitable, while private goods are profitable
2. Private goods are produced by private companies and public goods are produced by government
3. Public goods are in infinite quantity, private goods are in limited quantity
4. Private goods are excludable, Public goods are non-excludable