Quasi-public goods – definition

Quasi-public goods have characteristics of both private and public goods, including partial excludability, partial rivalry, partial diminishability and partial rejectability. Examples include roads, tunnels and bridges. Markets for these goods are considered to be incomplete markets and their lack of provision by free markets would be considered to be inefficient and a market failure.

For example, private enterprise could provide some bridges, roads and tunnels if a charging system could be applied which solves the free rider problem. However, it is unlikely that all an economy’s (households and firm’s) need for transport and infrastructure could be met this way. Indeed, toll charge systems could be regarded as inefficient in that traffic slows down to pay at the toll booth, and traffic builds up causing congestion and increased external costs. However, the introduction of new technology, such as ‘smarter’ payments systems and number-plate recognition technology means that the free rider problem can be reduced or eliminated and the price mechanism can operate. Hence, over time, technology can convert public goods to quasi-public goods, and eventually to private goods.