When you pay to have rubbish taken away, it has a negative price
Usually money flows one way and the product flows the other. With household rubbish, both the cash and the bin bags travel toward the collector. Economists call such unwanted things bads, the mirror image of goods: their owners will pay to be rid of them, which means their price is effectively below zero.
In economics a good is simply anything that makes someone better off. The ones economists study most are scarce, meaning that producing them takes effort or resources. Air and seawater are useful, yet so plentiful that nobody charges for them, so they count as free goods. Another basic idea is diminishing marginal utility: the first slice of cake delights, and each further slice satisfies a little less.
Goods sort themselves in several ways. A bicycle sold to a shopper is a final good, while the parts that went into it are intermediate goods. Some goods have plenty of substitutes, so a small price rise sends buyers elsewhere, as when dearer pens push people toward pencils. Others, such as insulin or an original painting by a famous artist, have few alternatives and sell regardless. Complements move together: if beef gets pricier and people buy less, sales of hamburger buns can fall even though bun prices never changed.
A powerful classification asks two questions. Can people be kept from using it, and does one person's use leave less for others? A private good such as an apple passes both tests. Fireworks and national parks are public goods, open to all and not used up, which is why markets tend to supply too little of them. Cable television is a club good: you must pay to join, but an extra viewer takes nothing from the rest. Fisheries are common-pool resources, hard to fence off yet easily depleted, which invites overfishing.
The Nobel laureate Elinor Ostrom and her husband Vincent refined this scheme in 1977, treating both qualities as sliding scales rather than simple yes or no, and stressing that forests, water systems and the atmosphere are shared resources on which human survival depends.
Source: Goods
