Classifications of Goods in Economics

In both macroeconomics and microeconomics, goods are one of the two supply side economic objects. Goods are fundamental to any economic system as they operate for use or trade in society. Goods can be put into one of four categories -- public, private, common or club -- depending on their economic function and typical societal use.
  1. Background: Subtractable and Excludable Goods

    • Each type of good is typically either subtractable, excludable, both or neither. A good is excludable if it has private rights and cannot be freely used by other people. A typical example of this would be consumer goods; customers pay for the legal rights to own and use the product. On the other hand, a good is subtractable if the good diminishes in quantity or value through normal use. An example of a subtractable good would be food as it is consumed after purchase.

    Public Goods

    • Public goods are neither subtractable nor excludable. As the name implies, these goods are public domain and serves a local or national community. These types of goods also typically have applicable government regulations and restrictions on their use. Some notable examples would be public knowledge, freeways and government buildings, such as police departments.

    Private Goods

    • Private goods are both subtractable and excludable. Rights to private goods are given in exchange for money and after which they are legally protected from use by any other person. Most consumer goods such as electronics and food fall under this category. A common characteristic of private goods is that they are almost always made for profit.

    Club Goods

    • Club goods are excludable but not subtractable. Rights to use these products are usually given to a large amount of people at the same time. These goods are named as such because they work similarly to a club membership and its attached benefits -- they do not expire and have an undefined quantity. Some daily examples include Internet access, movies and phone network service.

    Common Goods

    • Common goods are subtractable but not excludable. Anyone can use these goods but use is regulated due to a limited quantity. These goods are government funded and are replenished or updated on a regular basis. Goods that are quantifiable, even if not actually quantified, also fall under this category. Examples of these goods are natural resources -- there is usually no accurate quantity count but they are understood to be limited and are protected as such. Other types of common goods include health care and library books.

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