Di
scussi
ngwhet
her i
nfor
mat
ioni
sapubl
i
cgoodornotandt
hemar
ketf
ail
urest
hat
exi
stt
ojust
if
ygov
ernment
'si
nter
vent
ioni
nthepr
ovi
sionofi
nfor
mat
ion
Thecl
assi
ceconomi
csdef
ini
ti
on ofa publ
i
cgood (
orbad)i
sa good orser
vice
char
act
eri
sedbynon-
ri
val
ryandnon-
excl
udabi
l
ity(
Samuel
son,1954;Buchanan,1965;
Ost
rom andOst
rom,
1977,
1997;
Cor
nesandSandl
er,
1996)
.Non-
ri
val
ryi
mpl
i
est
hatone
per
son’
sconsumpt
ionoft
hegooddoesnotpr
ecl
udeanot
herper
sonf
rom consumi
ngi
t.
Non-
excl
udabi
l
itymeanst
hatno-
onecanbeexcl
udedf
rom consumi
ngt
hegood(
ort
hat
i
twoul
dbet
ooexpensi
vet
opr
eventt
heconsumpt
ionf
rom ot
heragent
s).
Akeychar
act
eri
sti
cofpubl
i
cgoodsi
sthatconsumpt
ionbyonei
ndi
vi
dualdoesnot
di
mini
sht
hequant
it
yav
ail
abl
etoanot
her
,thati
s,t
heyar
enonr
ival
rous.I
naddi
ti
on,
publ
i
cgoodsar
enonexcl
udabl
e.I
nli
newi
tht
hePar
etoOpt
imal
i
tycondi
ti
on,whi
ch
st
atest
hatt
her
eshoul
dbenor
oom f
ori
mpr
ovementwi
thoutmaki
ngsomeoneel
se
wor
seof
f,meanst
hatexcl
udi
ngani
ndi
vi
dualf
rom consumi
ngapubl
i
cgood,
wil
lmake
t
hati
ndi
vi
dualwor
seof
f,t
husv
iol
ati
ngt
hePar
etoopt
imal
i
tycondi
ti
on.Publ
i
cgoods
i
ncl
udef
reeheal
thcar
e,f
reeeducat
ion,nat
ionaldef
ense,andl
egalsy
stemsamong
ot
her
s.Asnot
edbyCunni
ngham (
2011)
,“amar
ketf
ail
uref
rom publ
i
cgoodsoccur
s
whent
hesegoodsar
epr
ovi
dedt
obenef
itv
eryl
i
ttl
einsoci
etyorwher
ethepubl
i
csect
or
f
ail
stor
espondt
oademandt
hati
sint
hei
nter
estofsoci
etyasawhol
e.”
Asdef
inedbyWi
nst
on(
2006)
,“mar
ketf
ail
urei
sanequi
l
ibr
ium al
l
ocat
ionofr
esour
ces
t
hati
snotPar
etoOpt
imal
–thepot
ent
ial
causesofwhi
chmaybemar
ketpower
,nat
ural
monopol
y,i
mper
fecti
nfor
mat
ion,ext
ernal
i
ties,orpubl
i
cgood.
”Int
hiscont
ext
,the
Par
etoOpt
imal
i
tyoref
fi
ciencypar
adi
gm st
atest
hatf
ormi
croeconomi
cef
fi
ciencyt
obe
achi
eved,t
her
eshoul
dbenor
oom t
omakeoneper
sonbet
ter
-of
fwi
thoutmaki
ng
anot
herwor
seof
f.
Dol
l
eyandWal
l
is(
2001)ont
heot
herhanddef
inedmar
ketf
ail
ureas
“
thei
nabi
l
ityofamar
ketorsy
stem ofmar
ket
stopr
ovi
degoodsandser
vicesei
therat
1
, al
lori
naneconomi
cal
l
yopt
imalmannerI
nter
msofal
l
ocat
iveef
fi
ciencyaspost
ulat
ed
byPi
gou (
1920)
,mar
ketf
ail
ure occur
s when mar
ginalsoci
alcost
s do notequal
mar
ginalsoci
albenef
it
s–t
hati
s,t
hel
ackofsi
mul
tanei
tybet
weenmar
ketpr
icesand
mar
ginalsoci
alcost
s,i
ndi
cat
ing t
hatmar
ketpr
icesdonotpr
eci
sel
ysi
gnalsoci
alcost
s
i
ncur
redi
nthepr
oduct
ionofagood,whi
chof
tenl
eadst
ounder
-orov
erpr
oduct
ion
(
Dol
l
eryandWal
l
is2001)
.
Reasonsf
orMar
ketFai
l
ure
Thei
nef
fi
ciental
l
ocat
ionofr
esour
cesi
naneconomyi
sdescr
ibedasmar
ketf
ail
ure.
Thet
erm"
mar
ketf
ail
ure”doesnotmeant
hemar
keti
snotwor
kingatal
l
,butt
akent
o
meant
hatt
hemar
keti
snotoper
ati
ngati
tspot
ent
ialorequi
l
ibr
ium ef
fi
ciencybecause
i
tisnotpr
oduci
nggoodst
hatar
ewant
ed(
Cunni
ngham 2011)
Thegov
ernmenti
nademocr
ati
ccount
rymustpr
ovi
det
hei
rinf
ormat
iont
othei
rci
ti
zens
asi
tist
hei
rri
ghtt
hrought
heRi
ghtt
oinf
ormat
ionact
.Al
lthei
nfor
mat
ionaboutt
he
gov
ernmentact
ivi
ti
esshoul
dbepr
ovi
dedt
otheci
ti
zens.I
nfor
mat
ionr
egar
dingot
her
count
ri
esshoul
dal
sobeav
ail
abl
etoal
ltheci
ti
zens.
I
nter
msofar
gui
ngaboutpubl
i
cgoods,i
nfor
mat
ioni
sapubl
i
cgood.
Consumpt
ionofa
f
actori
nfor
mat
ionbyoneper
sondoesn'
tpr
eventsomeoneel
sef
rom consumi
ngi
t.I
t'
s
non-
excl
udabl
eal
sosi
nceone canconsumeaf
actori
nfor
mat
ionev
eni
fonehav
en'
t
pai
dfori
t.
Chal
l
engesi
nident
if
yingpubl
i
cgoods
Thedef
ini
ti
onofnon-
excl
udabi
l
ityst
atest
hati
tisi
mpossi
blet
oexcl
udei
ndi
vi
dual
s
f
rom consumpt
ion.Technol
ogynow al
l
owsr
adi
oorTV br
oadcast
stobeencr
ypt
ed
sucht
hatper
sonswi
thoutaspeci
aldecoderar
eexcl
udedf
rom t
hebr
oadcast
.Many
f
ormsofi
nfor
mat
iongoodshav
echar
act
eri
sti
csofpubl
i
cgoods.Forexampl
e,apoem
canber
eadbymanypeopl
ewi
thoutr
educi
ngt
heconsumpt
ionoft
hatgoodbyot
her
s;
i
nthi
ssense,i
tisnon-
ri
val
rous.Si
mil
arl
y,t
hei
nfor
mat
ioni
nmostpat
ent
scanbeused
byanypar
tywi
thoutr
educi
ngconsumpt
ionoft
hatgoodbyot
her
s.I
nfor
mat
iongoods
2
scussi
ngwhet
her i
nfor
mat
ioni
sapubl
i
cgoodornotandt
hemar
ketf
ail
urest
hat
exi
stt
ojust
if
ygov
ernment
'si
nter
vent
ioni
nthepr
ovi
sionofi
nfor
mat
ion
Thecl
assi
ceconomi
csdef
ini
ti
on ofa publ
i
cgood (
orbad)i
sa good orser
vice
char
act
eri
sedbynon-
ri
val
ryandnon-
excl
udabi
l
ity(
Samuel
son,1954;Buchanan,1965;
Ost
rom andOst
rom,
1977,
1997;
Cor
nesandSandl
er,
1996)
.Non-
ri
val
ryi
mpl
i
est
hatone
per
son’
sconsumpt
ionoft
hegooddoesnotpr
ecl
udeanot
herper
sonf
rom consumi
ngi
t.
Non-
excl
udabi
l
itymeanst
hatno-
onecanbeexcl
udedf
rom consumi
ngt
hegood(
ort
hat
i
twoul
dbet
ooexpensi
vet
opr
eventt
heconsumpt
ionf
rom ot
heragent
s).
Akeychar
act
eri
sti
cofpubl
i
cgoodsi
sthatconsumpt
ionbyonei
ndi
vi
dualdoesnot
di
mini
sht
hequant
it
yav
ail
abl
etoanot
her
,thati
s,t
heyar
enonr
ival
rous.I
naddi
ti
on,
publ
i
cgoodsar
enonexcl
udabl
e.I
nli
newi
tht
hePar
etoOpt
imal
i
tycondi
ti
on,whi
ch
st
atest
hatt
her
eshoul
dbenor
oom f
ori
mpr
ovementwi
thoutmaki
ngsomeoneel
se
wor
seof
f,meanst
hatexcl
udi
ngani
ndi
vi
dualf
rom consumi
ngapubl
i
cgood,
wil
lmake
t
hati
ndi
vi
dualwor
seof
f,t
husv
iol
ati
ngt
hePar
etoopt
imal
i
tycondi
ti
on.Publ
i
cgoods
i
ncl
udef
reeheal
thcar
e,f
reeeducat
ion,nat
ionaldef
ense,andl
egalsy
stemsamong
ot
her
s.Asnot
edbyCunni
ngham (
2011)
,“amar
ketf
ail
uref
rom publ
i
cgoodsoccur
s
whent
hesegoodsar
epr
ovi
dedt
obenef
itv
eryl
i
ttl
einsoci
etyorwher
ethepubl
i
csect
or
f
ail
stor
espondt
oademandt
hati
sint
hei
nter
estofsoci
etyasawhol
e.”
Asdef
inedbyWi
nst
on(
2006)
,“mar
ketf
ail
urei
sanequi
l
ibr
ium al
l
ocat
ionofr
esour
ces
t
hati
snotPar
etoOpt
imal
–thepot
ent
ial
causesofwhi
chmaybemar
ketpower
,nat
ural
monopol
y,i
mper
fecti
nfor
mat
ion,ext
ernal
i
ties,orpubl
i
cgood.
”Int
hiscont
ext
,the
Par
etoOpt
imal
i
tyoref
fi
ciencypar
adi
gm st
atest
hatf
ormi
croeconomi
cef
fi
ciencyt
obe
achi
eved,t
her
eshoul
dbenor
oom t
omakeoneper
sonbet
ter
-of
fwi
thoutmaki
ng
anot
herwor
seof
f.
Dol
l
eyandWal
l
is(
2001)ont
heot
herhanddef
inedmar
ketf
ail
ureas
“
thei
nabi
l
ityofamar
ketorsy
stem ofmar
ket
stopr
ovi
degoodsandser
vicesei
therat
1
, al
lori
naneconomi
cal
l
yopt
imalmannerI
nter
msofal
l
ocat
iveef
fi
ciencyaspost
ulat
ed
byPi
gou (
1920)
,mar
ketf
ail
ure occur
s when mar
ginalsoci
alcost
s do notequal
mar
ginalsoci
albenef
it
s–t
hati
s,t
hel
ackofsi
mul
tanei
tybet
weenmar
ketpr
icesand
mar
ginalsoci
alcost
s,i
ndi
cat
ing t
hatmar
ketpr
icesdonotpr
eci
sel
ysi
gnalsoci
alcost
s
i
ncur
redi
nthepr
oduct
ionofagood,whi
chof
tenl
eadst
ounder
-orov
erpr
oduct
ion
(
Dol
l
eryandWal
l
is2001)
.
Reasonsf
orMar
ketFai
l
ure
Thei
nef
fi
ciental
l
ocat
ionofr
esour
cesi
naneconomyi
sdescr
ibedasmar
ketf
ail
ure.
Thet
erm"
mar
ketf
ail
ure”doesnotmeant
hemar
keti
snotwor
kingatal
l
,butt
akent
o
meant
hatt
hemar
keti
snotoper
ati
ngati
tspot
ent
ialorequi
l
ibr
ium ef
fi
ciencybecause
i
tisnotpr
oduci
nggoodst
hatar
ewant
ed(
Cunni
ngham 2011)
Thegov
ernmenti
nademocr
ati
ccount
rymustpr
ovi
det
hei
rinf
ormat
iont
othei
rci
ti
zens
asi
tist
hei
rri
ghtt
hrought
heRi
ghtt
oinf
ormat
ionact
.Al
lthei
nfor
mat
ionaboutt
he
gov
ernmentact
ivi
ti
esshoul
dbepr
ovi
dedt
otheci
ti
zens.I
nfor
mat
ionr
egar
dingot
her
count
ri
esshoul
dal
sobeav
ail
abl
etoal
ltheci
ti
zens.
I
nter
msofar
gui
ngaboutpubl
i
cgoods,i
nfor
mat
ioni
sapubl
i
cgood.
Consumpt
ionofa
f
actori
nfor
mat
ionbyoneper
sondoesn'
tpr
eventsomeoneel
sef
rom consumi
ngi
t.I
t'
s
non-
excl
udabl
eal
sosi
nceone canconsumeaf
actori
nfor
mat
ionev
eni
fonehav
en'
t
pai
dfori
t.
Chal
l
engesi
nident
if
yingpubl
i
cgoods
Thedef
ini
ti
onofnon-
excl
udabi
l
ityst
atest
hati
tisi
mpossi
blet
oexcl
udei
ndi
vi
dual
s
f
rom consumpt
ion.Technol
ogynow al
l
owsr
adi
oorTV br
oadcast
stobeencr
ypt
ed
sucht
hatper
sonswi
thoutaspeci
aldecoderar
eexcl
udedf
rom t
hebr
oadcast
.Many
f
ormsofi
nfor
mat
iongoodshav
echar
act
eri
sti
csofpubl
i
cgoods.Forexampl
e,apoem
canber
eadbymanypeopl
ewi
thoutr
educi
ngt
heconsumpt
ionoft
hatgoodbyot
her
s;
i
nthi
ssense,i
tisnon-
ri
val
rous.Si
mil
arl
y,t
hei
nfor
mat
ioni
nmostpat
ent
scanbeused
byanypar
tywi
thoutr
educi
ngconsumpt
ionoft
hatgoodbyot
her
s.I
nfor
mat
iongoods
2
