Public goods (collective) | Market failure

In a market economy, goods and services can be bought and sold on a market. Public goods can not be bought and sold on a market.

Public goods are goods where it is impossible to exclude anyone from using the goods and goods that are not consumed when someone uses them. Examples of public goods are street lights and defense. Even those who do not pay for the defense will be defended in case of a war.

A person who uses a public good without paying for it, is called a free rider. Public goods must be financed by a single state. Public goods will not be produced in a pure market economy.