collective products

collective products

any goods or services that cannot be provided other than on a group basis because the quantity supplied to any one individual cannot be independently varied. Such products are non-excludable since it is difficult or impossible to exclude any individual from enjoying their benefits, for example, television airwave transmissions. Such products are also non-rival, insofar as one person's consumption of the product does not affect the consumption opportunities of anyone else. It is virtually impossible to get consumers to reveal their preferences regarding collective goods because rational consumers will attempt to become FREE-RIDERS, each understating his demand in the hope of avoiding his share of the cost without affecting the quantity he obtains. Consequently, such products cannot be marketed in the conventional way and we cannot use market prices to value them. Many goods and services supplied by government are of a collective nature, for example, national defence and police protection, and here government decides on the amounts of such products to provide and compels individuals to pay for them through taxation. See MARKET FAILURE, CLUB PRINCIPLE, SOCIAL PRODUCTS.
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