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I was wondering what differences and relations are between goods and commodities, from economics perspective?

  1. From good:

    In economics and accounting, a good is a product that can be used to satisfy some desire or need. More narrowly but commonly, a good is a tangible physical product that can be contrasted with a service which is intangible. As such, it is capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer. For example, an apple is a tangible good, as opposed to a haircut, which is an (intangible) service. One usage that preserves the distinction between goods and services by including both is commodity. In microeconomics, a 'good' is often used in this inclusive sense of the word (Milgate, 1987).

    Does the highlighted sentence mean that commodities consist of goods and services?

  2. From commodity:

    A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market.1

    Does it say that a commodity is some special kind of good? Is this contrary to Part 1?

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These definitions are indeed contradictory. The first implies that a good is a special kind of commodity, and the second says that a commodity is a special kind of good. Does Wikipedia promise anywhere that its entries are consistent with each other? –  Peter Shor Jul 4 '11 at 19:51

4 Answers 4

up vote 2 down vote accepted

The term "good" in this sense is kind of a squishy term. A commodity is simply something that can be bought and sold. Futures contracts are commodities, as are financial instruments which may be abstract in the extreme. Often these are called products. The Gross Domestic Product includes goods and services. But goods are definitely distinct from services. Whoever said commodities are goods is probably restricting the definition to to material things, but that's a distinction of convenience, not an absolute definition.

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I agree. A central quality of goods is that they are physical objects (so they definitely don't include services). A central quality of commodities is that they can be traded (so they don't include human rights, in an ideal world). I think there are no goods which are not also commodities, but plenty of commodities which are not goods. –  FumbleFingers Jul 4 '11 at 21:04
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A commodity is not "simply something which can be bought and sold". It almost always refers to goods which are not differentiated from each other. –  Marcin Jul 4 '11 at 21:05
    
@Marcin: Yes it is. An article of commerce is something that can be bought or sold. –  Robusto Jul 4 '11 at 22:39
    
I'd give you a +2 if I could, for incorporating the word squishy into your answer. That's a brilliant word. –  bracho monacho Jul 4 '11 at 22:43
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@Robusto: I'm sorry, but I just don't accept that that reflects the dominant usage in current writing. –  Marcin Jul 4 '11 at 22:58

A commodity is a good where all the items are common and interchangeable. If you are buying art or cars then one car or pickled shark differs from the next.

Commodities can be traded easily because there is no difference in the items. Oil of a certain grade (eg Brent crude) is interchangeable, you don't have to see the particular barrel you are buying - the same with minerals, wheat, pork bellies and frozen orange juice.

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I think this is the key distinction. Commodities have a simple market price -- as in wheat is 50 cents a Bushel, the value of non commodity goods can only be established when you try to sell them as in -- I though my Ford truck was worth $5000 but the dealer only offered my $3500. –  James Anderson Jul 5 '11 at 3:00

As reported by the NOAD, the meaning of goods used as noun is:

merchandise or possessions
• (British) things to be transported, as distinct from passengers

The meaning of commodity reported by the same dictionary is the following one:

a raw material or primary agricultural product that can be bought and sold, such as copper or coffee
• a useful or valuable thing, such as water or time

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I'd note that commodity usually implies a lack of differentiation. –  Marcin Jul 4 '11 at 21:06

The definitions are not in conflict, at least in their intentions. Goods are tangible, as opposed to services. Commodities are goods (or, I assume, certain services), that are generic and therefore have a market price.

I agree that the first definition should not have introduced the idea of commodities the way it did, since many goods and services are not commodities.

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