Syllabus: Pearson - Pearson - A Level Economics
Module: 1.3 Market Failure
Lesson: 1.3.3 Public Goods

Introduction

This article supports the Pearson Edexcel A Level Economics A specification (1.3.3 Public goods), part of Theme 1: Introduction to Markets and Market Failure. It focuses on a vital concept within market failure, helping students distinguish between private and public goods, and understand why certain goods and services are not efficiently provided by markets alone.

Public goods underpin critical conversations about government responsibility, funding, and fairness. From national defence to street lighting, students gain insight into when and why markets fail, and how public policy steps in.

Key Concepts

Students studying 1.3.3 are expected to grasp:

• The distinction between public goods and private goods using two defining features: non-rivalry and non-excludability

• How the free rider problem leads to under-provision or non-provision of public goods

• Why markets may not supply public goods at all without government intervention

These ideas build on previous knowledge of externalities and rational consumer/producer behaviour. Diagrams are less central in this section, but clear examples are crucial.

Real-World Relevance

Teaching public goods lands best when linked to familiar, visible services. Examples that resonate include:

• Flood defences: once built, everyone benefits, and you can’t easily exclude someone from the protection they offer

• Lighthouses: historically cited as public goods due to their guidance for all ships regardless of payment

• National security: perhaps the clearest modern example, essential but difficult to provide via market forces

A timely discussion point is cybersecurity infrastructure. While some services are privately provided, the foundational protections often rely on government-backed systems, raising debate over public-good status in digital spaces.

How It’s Assessed

This topic features across exam styles:

• Short-answer questions asking students to define or distinguish between types of goods

• Data response items offering real-world scenarios to identify market failure

• Essay questions prompting evaluation of whether a good or service should be publicly or privately provided

Common command words:

• Define: “Define the term ‘non-excludability’”

• Explain: “Explain why public goods are underprovided in free markets”

• Evaluate: “Evaluate whether flood defences should be funded by government or private firms”

Encourage students to practise with applied examples and structure their answers clearly with reasoning chains.

Enterprise Skills Integration

This topic gives a useful lens for applying critical thinking and problem-solving:

• Decision-making: Should a particular good be publicly provided?

• Cost-benefit thinking: What’s the risk if we rely on private provision?

• Ethical reasoning: Who should pay for services we all use?

Encourage small-group debates where students take on different stakeholder roles—government, private firms, local residents—considering funding and delivery of a new public service.

Careers Links

Understanding public goods connects to:

• Public sector roles: policy analysts, civil servants, economists

• Infrastructure and planning: urban development, environmental policy

• Charity and not-for-profit sectors: where quasi-public goods are often delivered

This aligns with Gatsby Benchmarks 4, 5 and 6—highlighting curriculum links, employer engagement, and real workplace contexts. Use local examples (e.g. publicly funded transport) to make it relatable.

Teaching Notes

Tips for delivery:

• Use physical prompts (e.g. a torch as a “lighthouse”) to explore non-excludability and non-rivalry

• Visualise the free rider problem with class experiments—e.g. one group pays for a good, others benefit anyway

Common pitfalls:

• Confusing public goods with goods provided by the government (not all government-provided goods are public goods)

• Oversimplifying non-excludability—students may think it means “anyone can buy it,” which misses the point

Extension idea:
Ask students to research and argue whether the internet should be considered a public good. This opens debate about global inequality, access, and the role of government regulation.

Plug-and-play activity suggestion:
Have students classify a list of goods (e.g. fireworks display, public park, toll road) into public, private, or quasi-public, justifying each choice. Ideal as a starter or plenary.