Modern finance · 1950s–1990s
1954
Public goods
Paul Samuelson explains why markets underprovide things everyone can use.
In 1954 Paul Samuelson defined goods whose use by one person doesn't reduce what's left for others, and showed why private markets supply too little of them.
💡 Why it made sense then
It explained why defence, lighthouses and basic research are usually paid for by taxes.
Ideas it gave us
- 🏗️ Public good
A public good is non-excludable (you can't stop people using it) and non-rival (one person's use doesn't reduce another's), like national defence or a lighthouse. Markets underprovide them because of free riders.
Practise with $10,000 in play money
Free. No real money involved.