Non-exclusive and nonrival good: The marginal cost of provision to an additional consumer is zero and people cannot be excluded from consuming it.
A good is nonexclusive if people cannot be excluded from consuming it. As a consequence, it is difficult or impossible to charge peo- ple for using nonexclusive goods; the goods can be enjoyed without direct pay- ment. One example of a nonexclusive good is national defense. Once a nation has provided for its national defense, all citizens enjoy its benefits.
A good is nonrival if for any given level of production, the marginal cost of providing it to an additional consumer is zero.
Consider the use of a highway during a period of low traffic volume. Because the highway already exists and there is no congestion, the additional cost of driving on it is zero.
Most goods are rival in consumption. For example, when you buy furniture, you have ruled out the possibility that someone else can buy it. Goods that are rival must be allocated among individuals. Goods that are nonrival can be made available to everyone without affecting any individual’s opportunity for consuming them.
Some goods are exclusive but nonrival. For example, in periods of low traffic, travel on a bridge is nonrival because an additional car on the bridge does not lower the speed of other cars. But bridge travel is exclusive because bridge authorities can keep people from using it. A television signal is another example. Once a signal is broadcast, the marginal cost of making the broadcast available to another user is zero; thus the good is nonrival. But broadcast signals can be made exclusive by scrambling the signals and charging for the codes that unscramble them
Some goods are nonexclusive but rival. An ocean or large lake is nonexclusive, but fishing is rival because it imposes costs on others: the more fish caught, the fewer fish available to others. Air is nonexclusive and often nonrival; but it can be rival if the emissions of one firm adversely affect the quality of the air and the ability of others to enjoy it.
| Exclusive | Non-exclusive | |
|---|---|---|
| Rival | Private goods | Common resources/property |
| Non-rival | Club good | Public good |
Consumer or producer who does not pay for a nonexclusive good in the expectation that others will.