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What Are Free Goods?

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  • Written By: Mary McMahon
  • Edited By: Nancy Fann-Im
  • Last Modified Date: 24 July 2014
  • Copyright Protected:
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    Conjecture Corporation
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Free goods are goods that are readily available, with no real check on their availability, at a low or nonexistent cost to consumers. Air is commonly used as an example. Everyone needs air, but it is also easy to obtain and there are no limits on consumption. Free goods can be produced in a number of ways, and the definition can be a bit slippery; for instance, economists might argue that in fact air is not a free good because society incurs costs to protect air quality, like filtering smokestacks to limit pollution.

One method of production for free goods is as a byproduct of making something more valuable. A company that grows rice, for instance, does so for the rice itself, but also generates rice hulls, which can be burned to generate energy or used to make composite materials like planking. Waste products that a company would normally throw away can become free goods if they are valuable for consumers. Companies might, for instance, discard shipping pallets that other people could use for construction projects or fuel.

Other free goods are easy to reproduce at little to no cost. A website is an example. Multiple users can load a website at the same time and use the resources on it without it being any more costly. It costs the same to design a website whether 10 or 100 people use it. Access might be limited by restrictions on the server, but the website itself is still a free good.

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Certain other reproducible objects are technically free goods, but can be made scarce with legal protections. Books are an example. On its own, a book can be reproduced an infinite number of times, but the author can exert copyright protections to control the distribution and convert it from a free good to a scarce one.

In a wealthy society, free goods may be readily available. Between waste products generated while producing things of value, freely distributed materials like websites and public domain books, and other ample resources, members of society have access to numerous free products. Resource scarcity is more common in less wealthy societies, where all waste products, for example, have value because companies need to get the maximum value out of everything they make. The rice company in this example would need to sell waste products rather than leaving them for anyone to collect and use on their own.

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