public bad

A public bad is the opposite of a public good. It is something that is non-excludable and nondepletable, meaning it cannot be kept from individuals and one person's use does not diminish another's. A common example is polluted air, which affects everyone and cannot be excluded from anyone.1

Public bads are a form of market failure, where the market does not produce an optimal outcome. Because the costs of a public bad are not borne by those who create it, too much of it is produced or consumed. For instance, industrial pollution harms the environment and people, but the cost of this harm isn't included in the price of the goods produced, leading to overproduction.2

Governments often intervene to address public bads through measures like taxes, regulations, or subsidies to align private incentives with social costs.3