Sections
Key Terms
Key Terms
- free rider
- those who want others to pay for the public good and then plan to use the good themselves; if many people act as free riders, the public good may never be provided
- intellectual property
- the body of law that includes patents, trademarks, copyrights, and trade secret law that protect the rights of inventors to produce and sell their inventions
- nonexcludable
- when it is costly or impossible to exclude someone from using a good, and thus hard to charge for it
- nonrivalrous
- even when one person uses a good, others can also use it
- positive externalities
- beneficial spillovers to a third party or parties
- private benefits
- the dollar value of all benefits of a new product or process invented by a company that can be captured by the investing company
- private rates of return
- when the estimated rates of return go primarily to an individual; for example, earning interest on a savings account
- public good
- a good that is nonexcludable and nonrivalrous, and thus difficult for market producers to sell to individual consumers
- social benefits
- the dollar value of all benefits of a new product or process invented by a company that can be captured by other firms and by society as a whole
- social rate of return
- when the estimated rates of return go primarily to society; for example, providing free education