So every time we look at a good, we can decide whether or not it's excludable or
nonexcludable whether or not it is rival or nonrival.
And you can see here a table that classifies
various goods in one of these four options.
Up to this point in the course, we've mostly looked at pure private goods.
These are goods that are both rival and excludable.
Food and drink is a great example.
If I buy a dozen eggs, you cannot buy the same dozen eggs,
it is a rival good and it's also easily excludable.
It is easy for a store to say, if you don't buy the eggs, if you don't pay for
them, you don't get to buy them and take them home with you.
So this is a good that is clearly both rival and excludable.
We've also looked a little bit at goods that are nonrival, but excludable.
We've looked at natural monopolies, those goods for which there's a large fixed cost
to producing, but then there's a low marginal cost, and constant
marginal cost for the additional unit to be consumed by the additional person.
An extreme case of this would be a nonrival good where
the marginal cost is zero.
So let's think of a cable show on TV.
To produce that cable show costs a lot of money, probably
hundreds of thousands of dollars, if not a million dollars, to produce this one show.
But once the show is produced,
the extra cost of having one more person watch is, of course, zero.
So a good that is nonrival and excludable is an extreme case of a natural monopoly.
Let's think of goods that are rival and nonexcludable.
My favorite example is fish in the ocean.
The ocean is very big.
A little boat can go in the middle of the ocean and fish,
and it will be difficult to exclude people from going out and fishing there.
Maybe we can exclude people from fishing off our own private deck, but
the ocean as a whole, large parts of it are nonexcludable.
But, of course, fish are rival.
If I fish a fish you cannot fish the same fish.
So fish in the ocean is an example of a good that is rival and
nonexcludable, and we call these sort of goods a common resource.
Because they are common to all of us, we can go ahead and use them and
we cannot be excluded, but there's a cost to our using them.
If we use them, someone else cannot.