Difference between a Public Good and a Private Good - Essay Example

Forest reserves Yes, uncontrolled use of the resource will lead to depletion No, one consumer cannot prevent others from using the forest products. National grid electricity supply No, there is adequate supply despite market conditions Yes, once the available network is optimized, the population have to wait for further additional collection. A public good is both non-rival and non-excludable. This means that the availability of the good is independent of other users. Additionally, it is difficult if not impossible to prevent an individual from using the good.

A common resource consists of natural resources or man-made, which can be used by a large population through regulated or controlled use to prevent depletion. Although the quantity may be limited when used uncontrollably, controlled use ensures unlimited supply to the users.

Natural monopoly refers to the phenomenon whereby a market is dominated by a single firm or organization due to high capital costs. The firm makes heavy capital investment thereby creating an advantage of economies of scale. Other competitors, therefore, shy off since the startup costs are incredibly high and returns on investment very low due to the economies of scale enjoyed by the natural monopolistic firm (Norman et al, 2000).