charge for it

nonrivalrous even when one person uses the good, others can also use it

positive externalities beneficial spillovers to a third party or parties

private benefits the benefits a person who consumes a good or service receives, or a new product's benefits or

process that a company invents that the company captures

private rates of return when the estimated rates of return go primarily to an individual; for example, earning

interest on a savings account

public good good that is nonexcludable and non-rival, and thus is difficult for market producers to sell to

individual consumers

social benefits the sum of private benefits and external benefits

social rate of return when the estimated rates of return go primarily to society; for example, providing free

education

Key Concepts and Summary

13.1 Investments in Innovation

Competition creates pressure to innovate. However, if one can easily copy new inventions, then the original
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