Non‑excludability: Why Some Goods Are for Everyone
🏛️ 1. Pure Public Goods vs. Impure Non‑excludable Goods
Imagine you bake a cake. If someone doesn’t pay, you can simply refuse to give them a slice. That’s excludability. Now think of a lighthouse: its light flashes for every ship, whether they paid the harbour fee or not. You cannot cover the light just for paying ships. This impossibility is non‑excludability. Economists split goods into four groups using two criteria: excludable and rival. The table below places non‑excludable goods in the spotlight.
| Excludable | Non‑excludable | |
|---|---|---|
| Rival | Private goods (bread, shoes) | Common resources (fish in the ocean) |
| Non‑rival | Club goods (Netflix, gym) | Public goods (defence, clean air) |
Notice: non‑excludable goods can be rival (overfishing) or non‑rival (radio broadcast). The core problem is that no price can be charged for access. A young student can easily understand: if a street is lit at night, everyone walking there enjoys the light — you can’t turn it off for those who didn’t pay taxes.
🧩 2. The Free‑Rider Instinct and the Lighthouse Parable
Because no one can be excluded, individuals wait for others to pay. This is the free‑rider problem. In everyday life, if a group of neighbours wants a private security guard, some might refuse to pay but still benefit from the safer street. The good is non‑excludable within the neighbourhood. A classic story used by economists is the lighthouse[1]. In the 19th century, lighthouse owners could not charge every ship that saw the beam. They often went bankrupt. This shows that voluntary, private payments fail to produce enough of a non‑excludable good.
For middle‑school readers: suppose your class wants a clean whiteboard. If everyone thinks “someone else will clean it”, the board stays dirty. The benefit (clean board) is non‑excludable — everyone can see it. That’s the tiny free‑rider inside all of us. For high‑school level, we add a mathematical flavour: the optimal quantity of a public good occurs when the sum of marginal benefits equals the marginal cost.
🌍 3. Real‑world Non‑excludability: From Atmosphere to Algorithms
Look up. The air you breathe is non‑excludable. No company can wrap the atmosphere in plastic and demand a fee per breath. That’s why pollution is a by‑product — factories use the clean air as a free dump. Another modern example: open‑source software. Anyone can download Linux without paying; it’s non‑excludable (though some versions add support contracts). Even Wikipedia is nearly non‑excludable — millions read it free, and you cannot block non‑donors. These goods survive through donations, advertising, or government funding.
Elementary example: Street musicians in a subway. They play music; passers‑by can listen without paying. The musician can’t exclude non‑payers. They rely on tips. That’s a small‑scale non‑excludable performance.
High‑school extension: Digital goods like a weather app. If the app shows forecasts to everyone in a city, it’s non‑excludable (once the data is sent, anyone with the link sees it). To survive, developers put ads or sell premium features that are excludable (no ads version).
🛡️ Case Study: National Defence – The Ultimate Non‑excludable Shield
No example illustrates non‑excludability better than national defence. Once an army protects a country from invasion, every resident inside the border is protected — whether they paid taxes or evaded them. You cannot ask a missile: “Only hit houses of those who didn’t pay?”. This total non‑excludability forces every modern state to finance defence through compulsory taxation. No private company sells “defence subscriptions” because almost everyone would free‑ride.
Now think about a smaller copy: neighbourhood watch. If a community installs CCTV cameras in public streets, everyone passing through is monitored — including visitors who paid nothing. In some towns, residents vote for a special tax to fund cameras; it’s the only way to overcome free‑riding. The same principle applies to fireworks displays. A city’s 4th of July fireworks are visible from rooftops miles away. No ticket can exclude those distant viewers. Thus cities pay out of general taxes.
❓ Important Questions About Non‑excludability
A: Yes, but with difficulty. Private firms often tie the non‑excludable good to an excludable one. For example, radio stations (non‑excludable) sell advertising time (excludable). Another method is voluntary donations — the public broadcasting system[2] in many nations relies on viewer pledges. However, pure non‑excludable, non‑rival goods (like clean air) are seldom profitable for private firms.
A: Non‑excludability means you cannot keep people out. A common resource is both non‑excludable and rival. For instance, a public pasture: any herder can bring cows (non‑excludable), but the grass each cow eats is not available for others (rival). A pure public good (like a mathematical theorem) is non‑excludable and non‑rival — my use does not reduce your use.
A: Absolutely. Most goods lie on a spectrum. A toll road is excludable (toll booths), but if the booths cause traffic jams, some drivers use side streets — the “exclusion” is leaky. Likewise, a copyrighted song is legally excludable, but peer‑to‑peer file sharing makes it effectively non‑excludable. Economists call this impure public goods.
📌 Footnotes
[1] Lighthouse parable: A historical example used by John Stuart Mill and later Paul Samuelson. Many lighthouses in the 19th century were actually financed by port dues, but the light itself was non‑excludable at sea. Modern economists debate the details, but it remains the classic teaching tool for non‑excludability.
[2] Public broadcasting system (PBS): In the US and other countries, TV and radio funded by the government and listener donations; non‑payers cannot be excluded from over‑the‑air signals, so it’s a mixed model.