Global public good

In traditional usage, a global public good is a public good available on a more-or-less worldwide basis. There are many challenges to the traditional definition, which have far-reaching implications in the age of globalization.

In traditional usage, a global public good is a good that has the three following properties:

This concept is an extension of American economist Paul Samuelson's classic notion of public goods to the economics of globalization.

The traditional theoretical concept of public goods does not distinguish with regard to the geographical region in which a good may be produced or consumed. However, the term "global public good" has been used to mean a public good which is non-rivalrous and non-excludable throughout the whole world, as opposed to a public good which exists in just one national area. Knowledge has been used as a classic example of a global public good. In some academic literature, it has become associated with the concept of a common heritage of mankind.

Significant challenges exist to the classical definition of "public goods", in general, that are also relevant to the definition of "global public goods". Kaul et al. (2003), suggest that there are actually three types of public goods. First, there are public goods that cannot be made excludable, either because they are inherently indivisible or because the cost of division would be prohibitive. A simple example would be sunlight. Second, there are goods that are inherently public by design. Examples include a nation's judiciary system or basic education system. A third type, they argue, are goods that are public by default, either due to lack of foresight or knowledge in the design. An example of this type would be the ozone layer and damage done to the environment by chlorofluorocarbon (CFC) emissions before anyone understood the potential for damage.

Many of the challenges to traditional definitions have to do with how to handle externalities, which pose fundamental economic policy problems when individuals, households, governments or firms do not include, in their total cost accounting, the indirect costs of or the benefits from their economic transactions.Private goods producers, for example, can lower their total costs, and therefore their prices, by externalizing (not including) certain costs, such as the costs of preventing air or water pollution that is a by-product of their production methods. Such a company, then, becomes a corporate free rider, driving up the cost of the "public goods" of clean air and water, which are often transnational resources.

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