Classifying goods: free, private, public, merit & demerit

Not all goods behave the same way, and the AS examiner wants you to sort them precisely. In this lesson Miss Hilma classifies goods using two sharp tests — rivalry and excludability — to separate free goods, private (economic) goods and public goods, and explains why the market under-provides public goods because of the free-rider problem. We then meet merit and demerit goods, and analyse them as the outcome of imperfect information: goods people misjudge, and so over- or under-consume. Throughout we use Namibian examples — street lighting, NBC broadcasting, immunisation, alcohol and tobacco — and see how and why the government steps in.