Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

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What classification is investable intellectual property (IP) considered to be?

Public good
Private good
Common resource
Collective good

The correct answer is: Private good

Investable intellectual property (IP) is classified as a private good because it is both excludable and rivalrous. This means that the owner of the IP can restrict access to it (excludable) and that its use by one party can diminish its availability to others (rivalrous). IP is typically owned by individuals or companies, which can monetize their rights through licenses, sales, or other commercial arrangements, hence the classification as a private good. This highlights the economic framework where intellectual property rights enable holders to benefit from their innovations or creations, distinguishing it from other classifications like public goods, which are non-excludable and non-rivalrous.