Trade, foreign policy, diplomacy and health

1. Global Public Goods and Health: concepts and issues

David Woodward, Richard D Smith

Quasi-public goods

Public goods are rarely "pure".

  • non-excludable but rival= common pool goods
  • non-rival but excludable=club goods

However, both excludability and rivalry are relative, not absolute, concepts. In terms of excludability, access to public goods in particular may be:

  • subject to access goods (see next slide);
  • subject to administrative control (e.g. TV licence creating artifical exclusion);
  • or subject to change over time (e.g. signal encryption creating exclusion).

Similarly, rivalry in consumption may be relative to capacity, particularly in the case of physical infrastructure. For example, if a sewage system has spare capacity its use is non-rival, but as the capacity constraint is approached use becomes rivalrous.
Between extremes of pure private and public goods lie two particularly important categories of such goods. First, ‘common pool goods’ are non-excludable but rivalrous in consumption, such as forests: the environmental benefits of forests are not excludable, but if they are used for logging these benefits are forgone. Second, ‘club goods’, which are, conversely, excludable but non-rivalrous, with the benefits spread among a sub-group of the population, whose membership may be controlled by the providers of the good or others. Examples include cable and satellite television broadcasts, which have the characteristic of non-rivalry for those who subscribe to them, with non-subscribers being excluded.
Thus, the classification of a good as public or private may be somewhat misleading. Rather, it is more appropriate to discuss the degree to which goods may be subject to excludability and/or the degree to which their consumption is rival. It is the understanding of these characteristics of the good in question that may then allow remedial action to be taken to correct market imperfections in their supply, as indicated below. However, for the purposes of this presentation, the broad categorisation of goods as largely private or public, and within public as largely common-pool or club goods, is made to facilitate ease of comparison and analysis.