Public goods are goods that are non-rival and non-excludable, meaning one person's use does not reduce availability to others and people cannot be prevented from using them. Examples include clean air, water quality, national defense, and open spaces. Environmental goods like air and water quality are also typically public goods. However, sometimes environmental goods are questioned as being pure public goods. Externalities occur when the production or consumption of a good impacts a third party not involved in the transaction, creating costs or benefits not reflected in the market price. Externalities can be positive or negative.

1. UNIT-2
EXTERNALITIES

2. Public and Environemtal goods
◦In economics, a public good refers to a commodity or service that is
made available to all members of a society.
◦Pure public goods have two defining features. One is ‘non‐rivalry,’
meaning that one person’s enjoyment of a good does not diminish the
ability of other people to enjoy the same good.
◦The other is ‘non‐excludability,’ meaning that people cannot be
prevented from enjoying the good.

3. Public and Environemtal goods
◦Air quality is an important environmental example of a public good.
Under most circumstances, one person’s breathing of fresh air does
not reduce air quality for others to enjoy, and people cannot be
prevented from breathing the air.
◦Public goods are defined in contrast to private goods, which are, by
definition, both rival and excludable.
◦Examples of public goods- national defence, Clean air, water quality,
open space, biodiversity, stable climate etc.
◦However, sometimes the evironmental goods are questioned to be pure
public goods or not.

6. Public and Environemtal goods
◦Environmental goods are typically non-market goods, including clean
air, clean water, landscape, green transport infrastructure (footpaths,
cycleways, greenways, etc.), public parks, urban parks, rivers, mountains,
forests, and beaches. Environmental goods are a sub-category of public
goods.
◦These environmental goods turn into 'Bads' when they have externalities
which are negative.

7. Positive and Negative Externalities
◦An externality is a cost or benefit caused by a producer that is not
financially incurred or received by that producer. An externality can be
both positive or negative and can stem from either the production or
consumption of a good or service. The costs and benefits can be both
private—to an individual or an organization—or social, meaning it can
affect society as a whole.
◦Externalities occur in an economy when the production or consumption
of a specific good or service impacts a third party that is not directly
related to the production or consumption of that good or service.

8. Sources to refer
◦ https://resources.environment.yale.edu/kotchen/pubs/pgchap.pdf