
In
economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
, goods are anything that is
good
In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil. The specific meaning and etymology of the term and its ...
, usually in the sense that it provides
welfare or
utility
In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings.
* In a normative context, utility refers to a goal or objective that we wish ...
to someone.
[ Alan V. Deardorff, 2006. ''Terms Of Trade: Glossary of International Economics'', World Scientific. Online version: Deardorffs' Glossary of International Economics]
"good"
an
Goods can be contrasted with bads, i.e. things that provide negative value for users, like
chores or
waste
Waste are unwanted or unusable materials. Waste is any substance discarded after primary use, or is worthless, defective and of no use. A by-product, by contrast is a joint product of relatively minor Value (economics), economic value. A wast ...
. A bad lowers a consumer's overall welfare.
Economics focuses on the study of economic goods, i.e. goods that are
scarce; in other words, producing the good requires expending effort or resources. Economic goods contrast with free goods such as air, for which there is an unlimited supply.
[Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill.]
Goods are the result of the
Secondary sector of the economy
In macroeconomics, the secondary sector of the economy is an economic sector in the three-sector theory that describes the role of manufacturing. It encompasses industries that produce a finished, usable product or are involved in constructi ...
which involves the transformation of
raw material
A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials/Intermediate goods that are feedstock for future finished ...
s or
intermediate good
Intermediate goods, producer goods or semi-finished products are Good (economics), goods, such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or mak ...
s into goods.
Utility and characteristics of goods
The change in utility (pleasure or satisfaction) gained by consuming one unit of a good is called its
marginal utility
Marginal utility, in mainstream economics, describes the change in ''utility'' (pleasure or satisfaction resulting from the consumption) of one unit of a good or service. Marginal utility can be positive, negative, or zero. Negative marginal utilit ...
. Goods are commonly considered to have diminishing marginal utility, which means that consuming more gives less utility per amount consumed.
Some things are useful, but not scarce enough to have
monetary value
In economics, economic value is a measure of the benefit provided by a goods, good or service (economics), service to an Agent (economics), economic agent, and value for money represents an assessment of whether financial or other resources are ...
, such as the
Earth's atmosphere; these are referred to as ''
free goods''.
''
Final good
A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good.
Whe ...
s'' are items that are ultimately consumed, rather than used in the production of another good. For example, a
microwave oven
A microwave oven, or simply microwave, is an electric oven that heats and cooks food by exposing it to electromagnetic radiation in the microwave frequency range. This induces Dipole#Molecular dipoles, polar molecules in the food to rotate and ...
or a
bicycle
A bicycle, also called a pedal cycle, bike, push-bike or cycle, is a human-powered transport, human-powered or motorized bicycle, motor-assisted, bicycle pedal, pedal-driven, single-track vehicle, with two bicycle wheel, wheels attached to a ...
that is sold to a consumer is a final good or consumer good, but the components that are sold to be used in those goods are ''
intermediate good
Intermediate goods, producer goods or semi-finished products are Good (economics), goods, such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or mak ...
s.'' For example,
textile
Textile is an Hyponymy and hypernymy, umbrella term that includes various Fiber, fiber-based materials, including fibers, yarns, Staple (textiles)#Filament fiber, filaments, Thread (yarn), threads, and different types of #Fabric, fabric. ...
s or
transistor
A transistor is a semiconductor device used to Electronic amplifier, amplify or electronic switch, switch electrical signals and electric power, power. It is one of the basic building blocks of modern electronics. It is composed of semicondu ...
s can be used to make some further goods.
''Commercial goods'' are construed as tangible products that are manufactured and then made available for supply to be used in an industry of commerce. Commercial goods could be tractors, commercial vehicles, mobile structures, airplanes, and even roofing materials. Commercial and personal goods as categories are very broad and cover almost everything a person sees from the time they wake up in their home, on their commute to work to their arrival at the workplace.
''
Commodities
In economics, a commodity is an economic good, usually a resource, that specifically has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
Th ...
'' may be used as a
synonym
A synonym is a word, morpheme, or phrase that means precisely or nearly the same as another word, morpheme, or phrase in a given language. For example, in the English language, the words ''begin'', ''start'', ''commence'', and ''initiate'' are a ...
for economic goods but often refer to marketable
raw material
A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials/Intermediate goods that are feedstock for future finished ...
s and
primary products
The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, fishing, forestry and mining.
The primary sector tends to make up a larger portion of the economy in d ...
.
Although common goods are
tangible
Tangibility is the property of being able to be perceived, especially by the sense of touch. Metaphorically, something can also be said to be "cognitively tangible" if one can easily understand it.
Law
In criminal law, one of the elements of ...
, certain classes of goods, such as
information
Information is an Abstraction, abstract concept that refers to something which has the power Communication, to inform. At the most fundamental level, it pertains to the Interpretation (philosophy), interpretation (perhaps Interpretation (log ...
, only take
intangible forms. For example, among other goods an
apple
An apple is a round, edible fruit produced by an apple tree (''Malus'' spp.). Fruit trees of the orchard or domestic apple (''Malus domestica''), the most widely grown in the genus, are agriculture, cultivated worldwide. The tree originated ...
is a tangible object, while
news
News is information about current events. This may be provided through many different Media (communication), media: word of mouth, printing, Mail, postal systems, broadcasting, Telecommunications, electronic communication, or through the te ...
belongs to an intangible class of goods and can be perceived only by means of an instrument such as
printers
Printer may refer to:
Technology
* Printer (publishing), a person
* Printer (computing), a hardware device
* Optical printer for motion picture films
People
* Nariman Printer (fl. c. 1940), Indian journalist and activist
* James Printer (1 ...
or
television
Television (TV) is a telecommunication medium for transmitting moving images and sound. Additionally, the term can refer to a physical television set rather than the medium of transmission. Television is a mass medium for advertising, ...
.
Types of goods

Goods' diversity allows for their classification into different categories based on distinctive characteristics, such as tangibility and (ordinal) relative elasticity. A tangible good like an apple differs from an intangible good like information due to the impossibility of a person to physically hold the latter, whereas the former occupies physical space. Intangible goods differ from services in that final (intangible) goods are transferable and can be traded, whereas a service cannot.
Price elasticity also differentiates types of goods. An elastic good is one for which there is a relatively large change in quantity due to a relatively small change in price, and therefore is likely to be part of a family of
substitute good
In microeconomics, substitute goods are two goods that can be used for the same purpose by consumers. That is, a consumer perceives both goods as similar or comparable, so that having more of one good causes the consumer to desire less of the other ...
s; for example, as pen prices rise, consumers might buy more pencils instead. An inelastic good is one for which there are few or no substitutes, such as tickets to major sporting events,
[Quotation from Murray Milgate, 2008, "Goods and Commodities". In: Palgrave Macmillan (eds) The New Palgrave Dictionary of Economics. Palgrave, Macmillan, London., in referencing an influential parallel definition of 'goods' by ]Alfred Marshall
Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist and one of the most influential economists of his time. His book ''Principles of Economics (Marshall), Principles of Economics'' (1890) was the dominant economic textboo ...
, 1891. '' Principles of Economics'',1961, 9th ed. Section I, page 54, Macmillan. original works by famous artists,
and prescription medicine such as insulin.
Complementary good
In economics, a complementary good is a good whose appeal increases with the popularity of its complement. Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases ...
s are generally more inelastic than goods in a family of substitutes. For example, if a rise in the price of beef results in a decrease in the quantity of beef demanded, it is likely that the quantity of hamburger buns demanded will also drop, despite no change in buns' prices. This is because hamburger buns and beef (in Western culture) are
complementary good
In economics, a complementary good is a good whose appeal increases with the popularity of its complement. Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases ...
s. Goods considered complements or substitutes are relative associations and should not be understood in a vacuum. The degree to which a good is a substitute or a complement depends on its relationship to other goods, rather than an intrinsic characteristic, and can be measured as
cross elasticity of demand
In economics, the cross (or cross-price) elasticity of demand (XED) measures the effect of changes in the price of one good on the quantity demanded of another good. This reflects the fact that the quantity demanded of good is dependent on not on ...
by employing statistical techniques such as covariance and correlation.
Bads
A ''bad,'' also known as a ''dis
commodity
In economics, a commodity is an economic goods, good, usually a resource, that specifically has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to w ...
,''
is the opposite of a good or
commodity
In economics, a commodity is an economic goods, good, usually a resource, that specifically has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to w ...
, because its consumption or presence lowers the customer's
utility
In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings.
* In a normative context, utility refers to a goal or objective that we wish ...
. With goods, a two-party transaction results in the exchange of money for some object, as when money is exchanged for a
car
A car, or an automobile, is a motor vehicle with wheels. Most definitions of cars state that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people rather than cargo. There are around one billio ...
. With a bad, however, both money and the object in question go the same direction, as when a household gives up both money and garbage to a
waste collector, meaning the garbage has a negative price (as the waste collector is receiving both garbage and money, thus paying a negative amount for the garbage).
Goods classified by exclusivity and competitiveness
Fourfold model of goods
Goods can be classified based on their degree of excludability and rivalry (competitiveness). Considering excludability can be measured on a continuous scale, some goods would not be able to fall into one of the four common categories used.
There are four types of goods based on the characteristics of rival in consumption and excludability: Public Goods, Private Goods, Common Resources, and Club Goods. These four types plus examples for anti-rivalry appear in the accompanying table.
Public goods
Goods that are both non-rival and non-excludable are called
public goods
In economics, a public good (also referred to as a social good or collective good)Oakland, W. H. (1987). Theory of public goods. In Handbook of public economics (Vol. 2, pp. 485–535). Elsevier. is a goods, commodity, product or service that ...
. In many cases, renewable resources, such as land, are common commodities but some of them are contained in public goods. Public goods are non-exclusive and non-competitive, meaning that individuals cannot be stopped from using them and anyone can consume this good without hindering the ability of others to consume them. Examples in addition to the ones in the matrix are national parks, or firework displays. It is generally accepted by mainstream economists that the market mechanism will under-provide public goods, so these goods have to be produced by other means, including government provision. Public goods can also suffer from the
Free-Rider problem
In economics, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Free riders may overuse common pool resources by not ...
.
Private goods
Private good
Private or privates may refer to:
Music
* "In Private", by Dusty Springfield from the 1990 album ''Reputation''
* Private (band), a Denmark-based band
* "Private" (Ryōko Hirosue song), from the 1999 album ''Private'', written and also recorded ...
s are excludable goods, which prevent other consumers from consuming them. Private goods are also rivalrous because one good in private ownership cannot be used by someone else. That is to say, consuming some goods will deprive another consumer of the ability to consume the goods. Private goods are the most common type of goods. They include what you have to get from the store. For examples food, clothing, cars, parking spaces, etc. An individual who consumes an apple denies another individual from consuming the same one. It is excludable because consumption is only offered to those willing to pay the price.
Common-pool resources
Common-pool resource
In economics, a common-pool resource (CPR) is a type of good consisting of a natural or human-made resource system (e.g. an irrigation system or fishing grounds), whose size or characteristics makes it costly, but not impossible, to exclude potent ...
s are rival in consumption and non-excludable. An example is that of fisheries, which harvest fish from a shared common resource pool of fish stock. Fish caught by one group of fishermen are no longer accessible to another group, thus being rivalrous. However, oftentimes, due to an absence of well-defined
property rights
The right to property, or the right to own property (cf. ownership), is often classified as a human right for natural persons regarding their Possession (law), possessions. A general recognition of a right to private property is found more rarely ...
, it is difficult to restrict access to fishermen who may overfish.
Club goods
Club goods are excludable but not rivalrous in the consumption. That is, not everyone can use the good, but when one individual has claim to use it, they do not reduce the amount or the ability for others to consume the good. By joining a specific club or organization we can obtain club goods; As a result, some people are excluded because they are not members. Examples in addition to the ones in the matrix are cable television, golf courses, and any merchandise provided to club members. A large television service provider would already have infrastructure in place which would allow for the addition of new customers without infringing on existing customers viewing abilities. This would also mean that marginal cost would be close to zero, which satisfies the criteria for a good to be considered non-rival. However, access to cable TV services is only available to consumers willing to pay the price, demonstrating the excludability aspect.
Economists set these categories for these goods and their impact on consumers. The government is usually responsible for public goods and common goods, and enterprises are generally responsible for the production of private and club goods, although this is not always the case.
History of the fourfold model of goods
In 1977, Nobel winner
Elinor Ostrom
Elinor Claire "Lin" Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American Political science, political scientist and Political economy, political economist whose work was associated with New institutional economics, New Institution ...
and her husband
Vincent Ostrom proposed additional modifications to the existing classification of goods so to identify fundamental differences that affect the incentives facing individuals. Their definitions are presented on the matrix.
Elinor Ostrom
Elinor Claire "Lin" Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American Political science, political scientist and Political economy, political economist whose work was associated with New institutional economics, New Institution ...
proposed additional modifications to the classification of goods to identify fundamental differences that affect the incentives facing individuals
# Replacing the term "rivalry of consumption" with "subtractability of use".
# Conceptualizing subtractability of use and excludability to vary from low to high rather than characterizing them as either present or absent.
# Overtly adding a very important fourth type of good—common-pool resources—that shares the attribute of subtractability with private goods and difficulty of exclusion with public goods. Forests, water systems, fisheries, and the global atmosphere are all common-pool resources of immense importance for the survival of humans on this earth.
# Changing the name of a "club" good to a "toll" good since goods that share these characteristics are provided by small scale public as well as private associations.
Expansion of fourfold model: anti-rivalrous
Consumption can be extended to include "Anti-rivalrous" consumption.
Expansion of Fourfold model: Semi-Excludable
The additional definition matrix shows the four common categories alongside providing some examples of fully excludable goods, Semi-excludable goods and fully non-excludeable goods. Semi-excludable goods can be considered goods or services that a mostly successful in excluding non-paying customer, but are still able to be consumed by non-paying consumers. An example of this is movies, books or video games that could be easily
pirated
Copyright infringement (at times referred to as piracy) is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, ...
and shared for free.
Trading of goods
Goods are capable of being physically delivered to a
consumer
A consumer is a person or a group who intends to order, or use purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
. Goods that are ''
economic intangibles'' can only be stored, delivered, and consumed by means of
media
Media may refer to:
Communication
* Means of communication, tools and channels used to deliver information or data
** Advertising media, various media, content, buying and placement for advertising
** Interactive media, media that is inter ...
.
Goods, both tangibles and intangibles, may involve the transfer of product
ownership
Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as '' title'', which may be separated and held by dif ...
to the consumer. Services do not normally involve transfer of ownership of the service itself, but may involve transfer of ownership of goods developed or marketed by a service provider in the course of the service. For example, sale of storage related goods, which could consist of storage sheds, storage containers, storage buildings as tangibles or storage supplies such as boxes, bubble wrap, tape, bags and the like which are consumables, or distributing
electricity
Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...
among consumers is a service provided by an
electric utility
An electric utility, or a power company, is a company in the electric power industry (often a public utility) that engages in electricity generation and distribution of electricity for sale generally in a regulated market. Electric utilities are ...
company. This service can only be experienced through the consumption of
electrical energy
Electrical energy is the energy transferred as electric charges move between points with different electric potential, that is, as they move across a voltage, potential difference. As electric potential is lost or gained, work is done changing the ...
, which is available in a variety of
voltage
Voltage, also known as (electrical) potential difference, electric pressure, or electric tension, is the difference in electric potential between two points. In a Electrostatics, static electric field, it corresponds to the Work (electrical), ...
s and, in this case, is the ''economic goods'' produced by the electric utility company. While the service (namely, distribution of electrical energy) is a process that remains in its entirety in the ownership of the electric service provider, the goods (namely, electric energy) is the object of ownership transfer. The consumer becomes an electric energy owner by purchase and may use it for any lawful purposes just like any other goods.
See also
*
Bad (economics)
*
Commodification
Commodification is the process of transforming inalienable, free, or gifted things (objects, services, ideas, nature, personal information, people or animals) into commodities, or objects for sale.For animals"United Nations Commodity Trade Stati ...
*
Fast-moving consumer goods
Fast-moving consumer goods (FMCG), also known as consumer packaged goods (CPG) or convenience goods, are products that are sold quickly and at a relatively low cost. Examples include non-durable household goods such as packaged foods, beve ...
*
Final goods
A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good.
W ...
*
Finished goods
Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.
Manufacturing
Manufacturing has three classes of inventory:
# Raw material
# Work in process
# Finished goods
A ...
*
Goods and services
Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...
*
Intangible asset
An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, exclusive franchises, Goodwill (accounting), goodwill, trademarks, and trade names, reputation, Research and development, R&D, Procedural knowledge, ...
*
Intangible good
*
List of economics topics
The following outline is provided as an overview of and topical guide to economics. Economics is a branch of science that analyzes the production, distribution, and consumption of goods and services. It aims to explain how economies work and ...
*
Property
Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, re ...
**
Tangible property
In law, tangible property is property that can be touched, and includes both real property and personal property (or moveable property), and stands in distinction to intangible property.
In English law and some Commonwealth legal systems, i ...
*
Service (economics)
A service is an act or use for which a consumer, company, or government is willing to payment, pay. Examples include work done by barbers, doctors, lawyers, mechanics, banks, insurance companies, and so on. Public services are those that society ...
Notes
References
* Bannock, Graham ''et al.'' (1997). ''Dictionary of Economics'', Penguin Books.
* Milgate, Murray (1987), "goods and commodities," ''
The New Palgrave: A Dictionary of Economics'', v. 2, pp. 546–48. Includes historical and contemporary uses of the terms in economics.
* Vuaridel, R. (1968). Une définition des biens économiques. (A definition of economic goods). L'Année sociologique (1940/1948-), 19, 133–170.
External links
*
{{Authority control
Utility
Supply chain management
Microeconomics