Even if there were very few pure public goods of any importance, their properties would be worth investigating. Actual goods vary in the degree to which they are excludable and rivalrous. The private good (excludable and completely rivalrous) and the pure public good (non-excludable and completely non-rivalrous) mark the limits of this variation, and for that reason alone, pure public goods would be worth studying. But there are pure public goods that are of far greater consequence than lighthouses. This chapter examines two of them.

KNOWLEDGE

Knowledge is a pure public good: once something is known, that knowledge can be used by anyone, and its use by any one person does not preclude its use by others. As an example, our use of calculus to study economics does not prevent millions of other people from simultaneously applying calculus to entirely different problems in industry and science. Or consider penicillin. Each unit of penicillin is a private good, requiring scarce resources to produce and available for the treatment of just one patient, but the knowledge of penicillin's antibiotic properties, and of the methods of producing it cheaply, is a public good. Possession of this knowledge means that an infected scratch need no longer lead to death.

Public goods are generally divided into two categories, public consumption goods and public factors of production. These categories are not mutually exclusive.