Excludability

In economics, excludability is the degree to which a <a href="/facts/Goods/AtK6gQh2">good</a>, <a href="/facts/Service_(economics)/B7L4tR8r">service</a> or <a href="/facts/Resource/NM1retdD">resource</a> can be limited to only paying customers, or conversely, the degree to which a supplier, producer or other managing body (e.g. a government) can prevent <a href="/facts/Consumption_(economics)/k3eeT8bw">consumption</a> of a good. In <a href="/facts/Economics/HYctA2Dn">economics</a>, a good, service or resource is broadly assigned two fundamental characteristics; a degree of excludability and a degree of <a href="/facts/Rivalry_(economics)/SKzqLqny">rivalry</a>. 
Excludability was originally proposed in 1954 by American economist <a href="/facts/Paul_Samuelson/dIU1hb4B">Paul Samuelson</a> where he formalised the concept now known as <a href="/facts/Public_good_(economics)/SmkvSRv3">public goods</a>, i.e. goods that are both non-rivalrous and non-excludable. Samuelson additionally highlighted the <a href="/facts/Market_failure/S8CGBAPk">market failure</a> of the <a href="/facts/Free-rider_problem/bXVYJGka">free-rider problem</a> that can occur with non-excludable goods. Samuelson's theory of good classification was then further expanded upon by <a href="/facts/Richard_Musgrave_(economist)/XRmoJsqE">Richard Musgrave</a> in 1959, <a href="/facts/Garrett_Hardin/dgd9G7qd">Garrett Hardin</a> in 1968 who expanded upon another key market inefficiency of non-excludeable goods; the <a href="/facts/Tragedy_of_the_commons/ctXVyh8r">tragedy of the commons</a>.
Excludability is not an inherent characteristic of a good. Therefore, excludability was further expanded upon by <a href="/facts/Elinor_Ostrom/pH3sokgW">Elinor Ostrom</a> in 1990 to be a continuous characteristic, as opposed to the discrete characteristic proposed by Samuelson (who presented excludability as either being present or absent). Ostrom's theory proposed that excludability can be placed on a scale that would range from fully excludable (i.e. a good that could theoretically fully exclude non-paying consumers) to fully non-excludeable (a good that cannot exclude non-paying customers at all). This scale allows producers and providers more in-depth information that can then be used to generate more efficient price equations (for public goods in particular), that would then maximize benefits and <a href="/facts/Externality/hGgw7gtT">positive externalities</a> for all consumers of the good

Excludability open-in-new

Excludability