Club good

A noncongested toll road is an example of a club good. It is possible to exclude someone from using it by simply denying them access but it is not a rival good since one person's use of the road does not reduce its usefulness to others.

Club goods (also artificially scarce goods, toll goods, collective goods or quasi-public goods) are a type of good in economics,[1] sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs. Often these goods exhibit high excludability, but at the same time low rivalry in consumption. Thus, club goods have essentially zero marginal costs and are generally provided by what is commonly known as natural monopolies.[2] Furthermore, club goods have artificial scarcity. Club theory is the area of economics that studies these goods.[3] One of the most famous provisions was published by Buchanan in 1965 "An Economic Theory of Clubs," in which he addresses the question of how the size of the group influences the voluntary provision of a public good and more fundamentally provides a theoretical structure of communal or collective ownership-consumption arrangements.[4]

  1. ^ Club Theory: A Contemporary Economic Review. Public Choice: Public Goods eJournal. Social Science Research Network (SSRN). Accessed 5 February 2020.
  2. ^ Jodi Beggs (2017) https://www.thoughtco.com/excludability-and-rivalry-in-consumption-1147876
  3. ^ Suzanne Scotchmer, 2008. "clubs," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  4. ^ James M. Buchanan (1965): "An Economic Theory of Clubs", in Economica, New Series, Vol. 32, No. 125, pp. 1–14.