Public Goods in General

We can now define a "public good" in general. Following the example of the lighthouse, modern economics defines a "public good" as a good that shares the two key characteristics of the lighthouse:

It is not practically possible to charge for the use of the good
The cost of the good is indivisible, so that its marginal cost is zero

Most economists would include the traditional governmental services, such as defense and the maintenance of law and order, in this category. Some economists find many other examples of public goods in a modern economy. There is a good deal of controversy on this.

Let us consider one other fairly clear example of a public good. The example is television and radio broadcasting without commercials. No-commercial broadcasting is a different service than broadasting with commercials, and we are concerned here only with no-commercial broadcasting. Broadcasting with commercials is a substitute for broadcasting without commercials, but not a perfect substitute. Does no-commercial broadcasting fit the definition of a public good?

It does. First, it is virtually impossible to charge those who benefit from the broadcast. Anyone with a radio or a TV can tune in and benefit without paying. Second, the marginal cost of the additional listener or TV-watcher is zero. So broadcasting without commercials fits both parts of the definition, and is a public good.

Economic theory tells us that a public good will not be provided by profit-oriented private suppliers, and sure enough, no-commercial radio and TV are mostly public radio and TV. There are a few radio and TV stations supported by charitable contributions -- mostly devoted to religious programming. But no-commercial broadcasting fits the theory of public goods in this way as well: profit oriented business doesn't supply no-commercial broadcasting.