Google
Monday 
March 4, 2024 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
REVENUE EFFECT: The goal of imposing taxes to generate revenue used to finance the operation of government, most notably to finance the provision of public goods. This is one of two reasons, and the primary reason, that governments impose taxes. The other reason is the allocation effect. Governments work the revenue effect because they need access to income and resources to build highways, defend the nation, educate the population, and maintain the legal system. They purchase these resources with tax revenue generated through the revenue effect.

Visit the GLOSS*arama


NONPAYER EXCLUDABILITY:

Whether or not nonpayers can be excluded from consuming a good. In other words, can those who do not pay for a good be excluded from consuming the good. Nonpayer excludability is based on the ability to possess and transfer property rights or ownership of a good. For some goods, nonpayers can be easily excluded from consumption because property rights are well-defined and easily controlled. For other goods nonpayers cannot be easily excluded from consumption because property rights are not well-defined and cannot be easily controlled. When combined with consumption rivalry, the result is four alternative types of goods -- private, public, common-property, and near-public.
Nonpayer excludability is a key characteristic that determines if those who do not pay for a good can be prevented from consuming the good. The key to nonpayer excludability is the ability to control the transfer of property rights. The two alternatives of nonpayer excludability are basic yes and not. Either nonpayers can be excluded or they cannot.

A related characteristic of goods is consumption rivalry, which is whether or not consumption of a particular good by one person prevents simultaneous consumption by another. These two characteristics give rise to four types of goods -- private (rival consumption and nonpayers can be excluded), public (nonrival consumption and nonpayers cannot be excluded), common-property (rival consumption and nonpayers cannot be excluded), and near-public (nonrival consumption and nonpayers can be excluded).

Nonpayer excludability determines whether or not goods can be exchanged through markets. If nonpayers can be excluded from consumption, then markets can be effectively used to exchange goods. If nonpayers cannot be excluded from consumption, then markets cannot be effectively used to exchange goods.

Exclude or Not

Nonpayer excludability has two possibilities -- excludable or nonexcludable.
  • Excludable: If goods have well-defined property rights, then nonpayers can be excluded from consuming a good. A candy bar provides an example of a good in which nonpayers can be easily excluded from consumption. If Roland Nottingham owns a candy bar, then he can prevent Victor Thurgood from eating, consuming, or enjoying this candy bar, if Roland does not offer payment.

  • Nonexcludable: If goods do not have well-defined property rights, then nonpayers cannot be excluded from consuming a good. A spectacular fireworks display provides an example of a good in which nonpayers cannot be easily excluded from consumption. Whether of not Roland Nottingham makes payment, he can watch this dazzling fireworks display lighting up the Shady Valley night sky from his front porch. The display is available for all Shady Valley residents to see, those who pay and those who don't.

Consumption Rivalry

Related to nonpayer excludability is the characteristic of consumption rivalry. This characteristic indicates whether the consumption of a particular good by one person prevents simultaneous consumption by another person. In other words, does consumption impose an opportunity cost on others. Rival consumption occurs if the consumption by one imposes an opportunity cost on others because others are prevented from consuming the good. Nonrival consumption occurs if the consumption by one does not impose an opportunity cost on others because others are not prevented from consuming the good.

Four Goods

Matching up consumption rivalry and nonpayer excludability in different combinations gives rise to four distinct types of goods. private, public, common-property, and near-public.

Let's take a look at each one.

  • Private: Private goods are characterized by rival consumption and the ability to exclude nonpayers. Such goods have well-defined property rights that can be transferred to others, but only if others pay to acquire ownership.

  • Public: Public goods are characterized by nonrival consumption and the inability to exclude nonpayers. These goods are, in essence, owned by everyone, which is actually okay because everyone can benefit from simultaneously consuming the goods.

  • Common-Property: Common-property goods are characterized by rival consumption and the inability to exclude nonpayers. These goods are owned by everyone, meaning they are not owned by anyone in particular. Even though consumption by one imposes an opportunity cost on others, one person cannot prevent another from consumption.

  • Near-Public: Near-public goods are characterized by nonrival consumption and the ability to exclude nonpayers. While nonpayers can be excluded from consumption, nonrival consumption means there is no efficiency reason to exclude nonpayers.

Market Exchanges

The nonpayer excludability characteristic of a good determines whether or not goods can be exchanged through markets. Market exchanges are only possible if goods have well-defined property rights that can be reassigned to another.

If nonpayers can be easily excluded from consumption, then property rights are well-defined and goods can be exchanged through markets. If nonpayers cannot be excluded from consumption, then property rights are not well-defined and goods cannot be exchanged through markets. In other words, markets can be used to allocated goods if those who do not pay can be excluded from gaining ownership and control. However, markets do not work, they fail, if those who do not pay cannot be excluded from gaining ownership and control.

<= NONDURABLE GOODS, CONSUMPTIONNO-RESERVE BANKING =>


Recommended Citation:

NONPAYER EXCLUDABILITY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: March 4, 2024].


Check Out These Related Terms...

     | consumption rivalry | good types | private goods | public goods | common-property goods | near-public goods | free-rider problem | public finance |


Or For A Little Background...

     | good | production | efficiency | consumption | market demand | market | market efficiency | public sector | private sector | property rights | ownership and control |


And For Further Study...

     | market failures | public goods: demand | public goods: efficiency | taxation principles | tax proportionality | tax effects | tax equity | involuntary exchange | benefit principle | ability-to-pay principle | public choice |


Search Again?

Back to the WEB*pedia


APLS

ORANGE REBELOON
[What's This?]

Today, you are likely to spend a great deal of time watching the shopping channel looking to buy either a birthday greeting card for your aunt or a wall poster commemorating the moon landing. Be on the lookout for high interest rates.
Your Complete Scope

This isn't me! What am I?

One of the largest markets for gold in the United States is the manufacturing of class rings.
"I much prefer the sharpest criticism of a single intelligent man to the thoughtless approval of the masses."

-- Johannes Kepler, German Astronomer

FIPS
Federal Information Processing Standards
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2024 AmosWEB*LLC
Send comments or questions to: WebMaster