Concept
Club goods (also artificially scarce goods or toll goods or collective goods) are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs. Often these goods exhibit high excludability, but at the same time low rivalry in consumption. Thus, club goods have essentially zero marginal costs and are generally provided by what is commonly known as natural monopolies. Furthermore, club goods have artificial scarcity. Club theory is the area of economics that studies these goods. One of the most famous provisions was published by Buchanan in 1965 "An Economic Theory of Clubs," in which he addresses the question of how the size of the group influences the voluntary provision of a public good and more fundamentally provides a theoretical structure of communal or collective ownership-consumption arrangements. Goods#Goods classified by exclusivity and competitiveness Examples of club goods include cinemas, cable television, software as a service, access to copyrighted works, and the services provided by social or religious clubs to their members. The EU is also treated as a club good, since the services it provides can be excluded from non-EU member states, but several services are nonrival in consumption. These include the free movement of goods, services, persons and capital within the Internal Market, and participation in a common currency: for example, adding extra countries to the Schengen Area would not make it more difficult for citizens of current EU members to move between countries. Public goods with benefits restricted to a specific group may be considered club goods. For example, expenditures that benefit all of the children in a household but not the adults. The existence of club goods for children may offset the effects of sibling competition for private investments in larger families. While a large number of children in a family would usually reduce private investment ratios per child, due to competition for resources, the effects of a larger family on club goods are not as straightforward.
