What defines a public good in economic terms?

A public good is defined in economic terms by its characteristics of being non-excludable and non-rival. Non-excludable means that it is not possible to prevent individuals from using the good, even if they do not pay for it. Examples include clean air and national defense, where individuals benefit regardless of their contribution. Non-rival, on the other hand, indicates that one individual's use of the good does not diminish the availability of that good for others. This means multiple people can consume the good simultaneously without affecting each other's enjoyment or access.

This combination of traits often leads to market failures because private markets may underprovide these goods. Since individuals cannot be effectively excluded from using them, there is little incentive for private entities to produce public goods, as they cannot easily capture profit or recoup costs associated with production. Thus, governments often step in to provide these goods, ensuring that they are available to all members of society.