goods and services

Goods are items that are usually (but not always) tangible, such as pens, physical books, salt, apples, and hats. Services are activities provided by other people, who include doctors, lawn care workers, dentists,

barbers

,

waiters

, or online servers, a digital book, a digital video game or a digital

movie

. Taken together, it is the production, distribution, and consumption of

goods

and services which underpins all economic activity and

trade

. According to

economic theory

, consumption of goods and services is assumed to provide

utility

(satisfaction) to the consumer or end-user, although

business

es also consume goods and services in the course of producing other goods and services (see: Distribution: Channels and intermediaries).

History

Physiocratic economists categorized production into productive labour and unproductive labour.

Adam Smith

expanded this thought by arguing that any economic activities directly related on material products (goods) were productive, and those activities which involved non-material production (services) were unproductive. This emphasis on material production was adapted by

David Ricardo

,

Thomas Robert Malthus

and John Stuart Mill, and influenced later Marxian economics. Other, mainly Italian, 18th-century economists maintained that all desired goods and services were productive.

Service-goods continuum

The division of consumables into services is a simplification: these are not discrete categories. Most business theorists see a continuum with pure service at one endpoint and pure tangible commodity goods at the other. Most products fall between these two extremes. For example, a

restaurant

provides a physical good ( prepared food), but also provides services in the form of ambience, the setting and clearing of the table, etc. Although some utilities, such as

electricity

and communications service providers, exclusively provide services, other utilities deliver physical goods, such as water utilities. For public sector contracting purposes,

electricity

supply is defined among goods rather than services in the European Union, whereas under United States federal procurement regulations it is treated as a service.

Goods are normally structural and can be transferred in an instant while services are delivered over a period of time. Goods can be returned while a service once delivered cannot. Goods are not always tangible and may be virtual e.g. a book may be paper or electronic.

Marketing

theory makes use of the service-goods continuum as an important concept which 'enables marketers to see the relative goods/services composition of total products'.

In a narrower sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing.

In international law

Distinctions are made between goods and services in the context of international trade liberalization. For example, the World Trade Organization's General Agreement on Tariffs and Trade (GATT) covers international trade in goods and the General Agreement on Trade in Services (GATS) covers the services sector.WTO
Services trade
accessed 17 November 2015

See also

*Commodity (Marxism)
*Fast-moving consumer goods
*Goods and services tax
*List of countries by GDP sector composition
*Tertiary sector of the economy
*Three-sector model

References

Further reading

* 274 pages.
* 64 pages.
*Smith, Adam.
The Wealth of Nations
' at Project Gutenberg

External links

International Classification of Goods and Services
at World Intellectual Property Organization
Electronic Code of Federal Regulations
at

Code of Federal Regulations

Nice Agreement Tenth Edition – General Remarks, Class Headings and Explanatory Notes – Version 2012

{{Authority control

Goods (economics)
Services (economics)