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According to many sources, cinemas ("the Internet!") and fire brigades (Mankiw economics 5th edition page 190) are club goods - excludable but non-rivalrous in consumption.

How can this be?

Isn't a seat in a cinema exactly the same as a chocolate bar? I buy it, I consume the seat. No one else can take that seat.

With fire protection - this seems preposterous. If the fire brigade puts out a fire next door and I haven't paid my taxes they've protected me. On the other hand does the fire brigade come and check your tax paying credentials before putting out a fire? (Is there a country that does that?). Finally the consumption of a fire brigade is highly rivalrous. Where I live it is highly unlikely that they could cover more than 1 simultaneous fire in the town. If there were two it would be more rivalrous than chocolate!

Finally, Internet connections are often given as an example of club goods. But again here, I have often been in a situation when the bandwidth is not enough for everyone in the room streaming Netflix at the same time. It is highly rivalrous. I have also heard of the ISPs looking at peak pricing prices on data according to time of day (it was an Economist article many years ago). That seems decidedly the action of companies trying to deal with rivalrous demand.

What are your thoughts? Where is my logic incorrect? Is this a case of "it's the textbook, but in reality...?"

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A single good can be club good, public good, private good or common resource depending on situation. For example, fish is traditional example of common resources but technological changes (such as better monitoring of fishing fleets) is turning it more into a club good. A bridge in a village might be public good (as having security guard would be too costly for small village and there is no traffic), but bridge in middle of city with lot of traffic private good.

Of course, you can question whether the examples Mankiw uses are the best examples, but point is the type of a good is highly context dependent. Its impossible to say all bridges or roads are public goods for example. Time and technology changes things as well.

Cinemas

Cinemas are not always 100% packed. You are right 100% full cinema is not club good, but any cinema with not fully used up capacity would be club good as allowing person to take the extra unused seat would not be rivalrous provided we know ex ante that seat will not be occupied.

Fire Protection

Excludability is about possibility/practicability of excluding people. Yes modern fire brigades do not check your taxes before putting out fire but they very well could be doing it. It would not be impossible or even too expensive not to be practicable, to implement. In fact in the US in past there used to be private fire brigades that would only help you if you paid for having your property protected and that was well before internet and computers. In today's day and age it would be trivial to check your tax compliance at virtually no cost before providing the service.

Next, single fire brigade cannot put out unrelated fires at the same time that is true. But this is same situation as with the cinema. Provided that fires are extremely rare (which they empirically are) a fire brigade is most of the time just sitting and waiting. If we know ex ante that there is never enough fires to make fire brigade completely preoccupied (perhaps in some city ex ante chance of two independent fires is nearly 0%), then fire brigade becomes a club good.

Internet

Again the same issue. Yes during peak hours in cities with bad internet infrastructure internet is not a club good but private good. However, in cities with excellent internet infrastructure where ex ante probability there is not enough bandwidth is zero it is club good.

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  • $\begingroup$ Thank you ever so much. That fits my intuition. So why on earth doesn't Mankiw write this? It would be a much less infantalising of the readership. The definitions seem to be stated as as "fixed facts". They are not. Exactly as you state the context is important. $\endgroup$
    – Studi
    Oct 28, 2022 at 12:41
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    $\begingroup$ @Food undergraduate textbooks do that for the sake of simplicity. Similarly an undergraduate physics textbook will just state laws of thermodynamics as always holding even though things are more nuanced because as universe expands energy can be created out nothing since more space implies more energy even if energy per unit of space is conserved. There is a lot of research showing that people learn easier when things are dumbed down and there is clear messaging. I personally dont like that but there are data to back that up, I still think its bad for students who have above average ability, $\endgroup$
    – 1muflon1
    Oct 28, 2022 at 12:53
  • $\begingroup$ but nowadays the goal is for everyone to have uni degree so materials have to be made in a way that almost everyone can effectively learn and then the nuance is supposed to come later in graduate studies. What you learn in undergraduate is just supposed to be foundation for further learning, so later in graduate studies you already have some idea of what club good is so teacher can devote time to the nuance for which there is not enough time in undergrad $\endgroup$
    – 1muflon1
    Oct 28, 2022 at 12:54
  • $\begingroup$ I would tend to agree with you. However, in this case I don't even think you have to "above average" to spot the weakness of the logic. The flaw is so gaping that it reduces the plausibility of the rest of the argumentation and leads you to wonder if the wool is being pulled over your eyes in the rest of the book! $\endgroup$
    – Studi
    Oct 28, 2022 at 13:09

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