nonmarketability

Nonmarketability refers to the characteristic of a good or service that prevents it from being bought and sold in a traditional market. This typically arises when the item cannot be easily excluded from use by non-payers or when its consumption by one person does not prevent others from consuming it.

A prime example of nonmarketability is found in public goods. These are goods that are both non-excludable and non-rivalrous. Non-excludable means it's difficult or impossible to prevent individuals from consuming the good even if they don't pay for it. Non-rivalrous means that one person's consumption of the good does not diminish the amount available for others. National defense or clean air are classic examples. Because these goods are nonmarketable, private firms have little incentive to produce them, as they cannot easily charge for their provision. This often leads to a role for government intervention, such as through taxation, to provide or subsidize these goods.

In contrast, private goods are excludable and rivalrous, making them easily marketable. For instance, a loaf of bread is excludable because the baker can prevent someone from taking it without payment, and it is rivalrous because once one person eats it, it cannot be eaten by another. The concept of nonmarketability is crucial in economics for understanding market failures and the rationale for government intervention in the economy.