Intangible good

An intangible good is a good that does not have a physical nature, as opposed to a physical good (an object). Digital goods such as downloadable music, mobile apps or virtual goods used in virtual economies are all examples of intangible goods. In an increasingly digitized world, intangible goods play a more and more important role in the economy. Virtually anything that is in a digital form and deliverable on the Internet can be considered an intangible good. In ordinary sense, an intangible good should not be confused with a service, since a good is an object, whereas a service is an activity or labor. So a haircut is a service, not an intangible good.

An intangible good is just a good that is intangible, i.e. incapable of being touched. So what is a good?

(A) In pure economics, a good is any object or service that increases utility, directly or indirectly. According to this definition A, intangible goods include services.

(B) In macroeconomics and accounting, a good is contrasted with a service. A good is defined as an object whose consumption increases the utility of the consumer, for which the quantity demanded exceeds the quantity supplied at zero price. Can an object be intangible then? In the most restricted sense, some people argue all objects are physical, and the resulting definition B leaves no place for intangible goods and classifies all of them as services.

(C) In a more ordinary sense, and a middle ground between definitions A and B, an object can be intangible, and we have the definition C of good.

According to definition A, (a) a printed book, (b) a piece of music downloaded from the Internet, and (c) a haircut are all considered a good even though (b) and (c) are intangible. According to definition B, only (a) is a good and both (b) and (c) are considered to be a service. By definition C, (a) is tangible good, (b) is intangible good and (c) is a service.

In a digital age with more and more transactions conducted on the Internet, definition C seems more reasonable.

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