1. Global Public Goods and Health: concepts and issues
David Woodward, Richard D Smith
Policy relevance of GPGs
Free markets under-supply public goods because:
(i) non-excludability means that a price cannot be enforced, leading to ‘free-riding’ (benefit from the actions of others without reciprocation); and
(ii) non-rivalry means that efficient consumption is where individual marginal cost is just greater than zero – this will be below market price, leading to less than optimal supply.
The fundamental problem arises, however, when beneficial non-rival goods are not excludable. Here, society will benefit from provision of the good, but non-excludability means that individuals or nations may free-ride (i.e. benefit from the actions of others without reciprocation), leading to under, or non, supply of the good and thus a societal loss of welfare.
We would argue, therefore, that the core policy issue is one of ensuring collective action at the global level to facilitate the production of, and access to, goods which are largely non-excludable and non-rival in consumption, and yield significant external benefits, across multiple nations.