Public Good
Definition: "Goods that are neither excludable nor rival consumption. People cannot be prevented from using a public good, and one person's use of a public good does not reduce another person's ability to use it." (Mankiw, 6th ed., pg. 218).
Example: Fireworks! Who doesn't like fireworks? No one can be excluded from enjoying a fireworks display.
Costs of Providing the Good
There are several factors that go into the cost of providing a fireworks display. First you have to have insurance, hire a professional company to do the actual display and perhaps hire local police to patrol the area making sure that peace is kept, especially when a large crowd gathers. The fireworks company will either light the fireworks by hand or they will computerize the show. The size, the shape, and the amount of each of the shells that contain the fireworks will also be a factor. Some shows are even set to music! The time spent putting everything together will also determine the cost. A small show can run a few thousand dollars and the more elaborate shows like the 4th of July in Washington D.C. or Philadelphia can run into the 100's of thousands of dollars, maybe even millions!
Some towns have a built in tax that helps pay for the display because so many people come from outside of those towns that everyone, especially the local businesses (restaurants, shops, hotels) really benefit from the influx of people.
Other smaller towns have found that it just isn't in the budget to host a fireworks display and have discontinued them. Some have found a way around this and decide that they want to do fundraisers to keep the town fireworks displays going.
Benefits of Providing the Good
A public display of fireworks provides a town or city, sporting event or any other special event feelings of joy, happiness, patriotism, and grandeur. It's a way of bringing a community or group of people together to enjoy.
Photo from photoblog.nbcnews.com.
Another way to have the good provided
Not all fireworks displays are paid for by local, state or federal monies nor are they just for one specific time period or group of people. Many times people like to have fireworks displays for their birthday, a wedding, an anniversary, on a cruise, at a baseball game.
Final Thoughts
After reading this chapter I looked at public goods pretty much in the same way that I had before. We all can benefit from public goods and even though others may benefit more from certain goods its a win win situation for everyone.
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