Private Good

See: Public Good.

Throw your ideas of privacy out your window. But not your clothes. You can keep those on.

Private goods are goods that are bought and consumed, and when they’re consumed, it prevents someone else from consuming it. When you buy popcorn and Sour Patch Kids at the movies, these are private goods. You’re buying them, and you consume them, which prevents others from consuming them. Sharing with your friend still makes it a private good, since the good is “excludable.”

What’s a good that’s non-excludable? A fireworks show. Some people pay to see the fireworks show, and get let into the little gated area with the best seating. Yet others can stand in the right places outside of the paid, gated area, and still “consume” the good, for free. Yep, free riders. Where there are free riders there are non-excludable goods.

Those who did pay aren’t having a lesser fireworks show because of the free riders. That means it’s also non-rivalrous, since many people can enjoy a fireworks show.

Some rando at the movies couldn’t consume your popcorn without directly taking it from you though, unlike the fireworks show. Popcorn is a rivalrous good; only one person can have each piece of popcorn.

When there are limits to who can consume something, it’s rivalrous. When others are excluded from consumption because you bought it, it’s excludable. Excludable and rivalrous = private good. Clothes, parking spaces, and food are all private goods: you have to buy them, and only so many people get use out of them at a time.

Private goods contrast with public goods, which are non-excludable (free), and non-rivalrous (consuming by one doesn’t lessen consumption by another). Like public parks.