Collective-consumption services of individual-consumption goods

Abstract

This article argues that some commodities exist that are apparently pure individual-consumption goods, but also possess characteristics of pure collective-consumption goods. These commodities are usually infrequently purchased and uncertain, and expanding production is costly or impossible once it has been halted. As a result, their demand cannot be met efficiently by the private market. The article uses examples such as national parks, hospitals, and urban transit systems to illustrate this point. When demand and user fees alone cannot justify their existence, it may be socially beneficial to subsidize these services or operate them publicly to ensure that the option demand is satisfied. – AI-generated abstract.