DSE Economics | Public Goods and Common Resources: A Teacher Prep Guide (Free Riding)

2026-11-04

Tutor lesson-prep guides · Secondary Economics

Students hear “public good” and assume it means “provided by government”. This lesson sorts four types of goods with two characteristics, then shows why a lighthouse is worth building yet impossible to fund voluntarily.

Objectives — Students can: (1) classify goods by excludability and rivalry; (2) compute how free riding shifts the cost per payer; (3) explain the tragedy of the commons and three remedies.

01 Prerequisites (3-minute check)

If any of these fails, fix it before the lesson starts.

Skill	Quick check	Pass mark
Cost sharing	1,200,000 divided by 400	3,000
Marginal thinking	What rising marginal cost means	Each extra unit costs more
Incentives	When a good is free, do people use more or less	More

02 Lesson flow (60 minutes)

Time	Stage	Tutor does	Student does
0-10 min	Two characteristics	Excludability and rivalry	One example per type
10-24 min	Free riding	Use without paying, cost shifts	$4,000 per payer
24-38 min	Worth building, hard to fund	Total benefit against total cost	Benefit $2,000,000 exceeds cost
38-50 min	Tragedy of the commons	Grazing land, fisheries, congested roads	Three consequences
50-56 min	Remedies	Quotas, charges, property rights	One example each
56-60 min	Exit check	Three questions collected and marked	Independent

03 Teaching script (read it out)

Scene 1: Four types of goods: two questions are enough

Excludability asks whether non-payers can be kept out; rivalry asks whether one person’s use reduces what others can consume.
Private goods are both excludable and rival; club goods are excludable but non-rival (pay TV); common resources are non-excludable but rival (a fishery); public goods are neither (street lighting).

Ask the class: which type is a congested toll tunnel (a common resource).

Scene 2: Free riding: the cost does not vanish, it moves

The lighthouse costs $1,200,000; split across 400 boats that is $3,000 each.
If 100 boats refuse to pay, the remaining 300 carry the whole bill at $4,000 each, a jump of $1,000. Payers then quit too, and voluntary funding collapses.

Ask the class to compute: the cost each if only 200 boats pay (6,000).

Scene 3: Tragedy of the commons: rational alone, ruinous together

Total benefit is 400 boats x 5,000 = $2,000,000, above the $1,200,000 cost, so society should build it; but non-excludability makes charging impossible, which is why it is tax funded.
Fisheries, grazing land and free roads behave the same way: the private cost of one more unit is near zero while the social cost is shared.

Warn them: “why must government provide it” is answered by non-excludability plus total benefit above total cost.

04 Question types and worked steps

Type	Example	Steps	Answer
Classification	Name the good type	Excludability first, rivalry second	Common resource
Calculation	Cost per payer after free riding	1,200,000 over the number who pay	4,000
Comparison	Should government provide it	Total benefit against total cost	2,000,000 above 1,200,000
Evaluation	Three commons remedies	Quota, charge, property right	One example each

Sanity check (teach this): A public good is both non-excludable and non-rival; something non-excludable but rival is a common resource, and confusing the two is the most common lost mark. Free riding means using without paying, not using until the good is gone: the cost is simply carried by payers or by taxpayers.

05 Independent practice (3 questions)

Question	Answer	What to watch
Cost per boat if all pay	$3,000	1,200,000 over 400
Cost per boat with 100 free riders	$4,000	1,200,000 over 300
Type of a congested toll road	Common resource	Non-excludable in effect, rival

06 Common mistakes and what to say

Mistake	Student writes	Say this
Equating public goods with government provision	Anything the government funds	“Government also provides private goods such as public housing; classify by the two characteristics, not by who pays.”
Confusing free riding with free use	Free riding means no cost exists	“The cost exists; it moves onto the people who do pay.”
Calling a fishery a public good	Fishery as a public good	“A fishery is rival: one more catch leaves less for others, so it is a common resource.”
Ignoring the margin	One more catch costs nothing	“Private marginal cost is near zero; social marginal cost is not.”

07 Homework (paper, section and question numbers)

Secondary Economics chapter index — All chapters and practice
DSE Economics practice paper — Section A multiple choice on market failure

08 Exit check (last 5 minutes)

Question	Answer	Decision
Two characteristics of a public good	Non-excludable and non-rival	All three right: move to trade
Cost per boat with 100 free riders	$4,000	One wrong: reteach cost sharing
Type of a fishery	Common resource	Two or more wrong: back to the first act

09 Tutor FAQ

Is free-to-air television a public good?

No: it is excludable in principle, so it is a club good.

Why tax funding rather than user charges?

Non-excludability makes charging impossible, so tax spreads the cost by force.

Can the commons be solved by self-restraint?

Sometimes in small communities; larger groups need quotas, charges or property rights.

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A TutorZone lesson-prep guide. Written by the TutorZone team; questions and lesson flow are original and are not taken from any school or publisher material.