Question

Why is a football game on ESPN a quasi-public good but a game on the NBC, CBS, or ABC is a public good?

Short answer

A football game on ESPN is a quasi-public good because it is non-rival (one person's consumption does not affect others) but only partially non-excludable (requires a paid subscription to access, thus excluding some viewers). Conversely, a football game on NBC, CBS, or ABC is a public good because it is both non-excludable (free over-the-air broadcast available to anyone with a television and antenna) and non-rival (one person's consumption does not affect the availability for others).

Step-by-step solution

Brief Overview of Public and Quasi-Public Goods

A public good is a good that is both non-excludable (cannot prevent someone from using the good) and non-rival (one person's use does not diminish the availability to others). A quasi-public good, on the other hand, is a good that is not fully non-excludable, or not fully non-rival but still exhibits these characteristics to an extent.

Non-Excludability

Let's first examine the non-excludability aspect of the goods. Football games on NBC, CBS, or ABC are available for free over-the-air broadcasts. This means anyone with a television and an antenna, regardless of whether they have a paid subscription or not, can watch the game without being excluded. ESPN broadcasts, on the other hand, require a subscription. Since ESPN is not available for free over-the-air, people without the subscription can be excluded from watching the football game.

Non-Rivalry

The non-rivalry aspect of the goods concerns whether one person's consumption of the good affects the availability for others. In the case of the football game, both ESPN and NBC, CBS, or ABC broadcasts are non-rival. One person watching the game does not prevent others from watching the same broadcast.

So, Which is Public and Which is Quasi-Public?

Based on the distinctions made on excludability and rivalry, we can now determine the type of goods in question. Football games on ESPN are quasi-public goods, as they are non-rival but only partially non-excludable due to the required paid subscription, allowing the provider to exclude those without subscriptions. In contrast, football games on NBC, CBS, or ABC, are public goods, as they are non-excludable, because they are available for free over-the-air and non-rival since one person's consumption does not affect the availability for others.

Key concepts

Non-Excludability

In the realm of microeconomic theory, non-excludability refers to a key characteristic of public goods where it is not feasible to prevent individuals from enjoying the benefit of a good or a service once it has been provided. This feature is critical in determining the nature of public goods.

Consider a lighthouse as a classical example of non-excludability: it is impossible to exclude ships from benefiting from the navigational guidance it provides. In the case of the football games on NBC, CBS, or ABC, the broadcasts are freely accessible on public airwaves, making them non-excludable. No one can prevent another from watching these games if they have the basic equipment needed to capture the signal. This open access makes such football game broadcasts public goods.

However, for channels like ESPN that require subscriptions, access is controlled. The service provider has the means to exclude non-paying customers, which introduces a level of excludability. Therefore, football games broadcasted on ESPN are not fully non-excludable, making them quasi-public goods instead.

Non-Rivalry

The principle of non-rivalry, as addressed in microeconomic theory, is the ability of a good to be consumed by one individual without reducing the quantity available for consumption by others. It's a hallmark of public goods and has significant implications on the efficiency of resource allocation.

A classic public good example that demonstrates non-rivalry is a fireworks display. Anyone can enjoy the spectacle without affecting another’s ability to do the same. Similarly, a football game broadcasted on television is a classic case of non-rivalry.

Quasi-Public Goods

Quasi-public goods occupy a hybrid space in economic theory. They blur the lines between private and public goods by exemplifying characteristics of both. A quasi-public good demonstrates elements of non-excludability or non-rivalry, but not to the full extent.

For instance, when considering football broadcasts, the game on ESPN can be categorized as a quasi-public good. Although the game's broadcast is non-rival – one person's viewing does not impede others from watching – it is not entirely non-excludable since only subscribers can access the content. Thus, these goods have some exclusion barriers, but they are not as prohibitive as those for private goods.

Microeconomic Theory

Microeconomic theory provides a framework for understanding the decision-making processes of individuals and firms as well as how goods and services are allocated in markets. Most notably, it looks at how various factors influence supply and demand, price determination, and resource distribution.

Pertaining to public and quasi-public goods, microeconomic theory discusses how these goods defy the conventional market rules that apply to private goods. They create unique challenges like the free-rider problem, where individuals can benefit from a good without paying for it, compromising the ability of markets to efficiently allocate resources to these types of goods. Understanding the nuances of public, private, and quasi-public goods is fundamental to grasping the broader implications of market economics and policy-making.