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Goods are items that are usually (but not always)tangible, such aspens orapples.Services are activities provided by other people, such asteachers orbarbers. Taken together, it is theproduction,distribution, andconsumption ofgoods andservices which underpins alleconomic activity andtrade. According toeconomic theory, consumption of goods and services is assumed to provideutility (satisfaction) to theconsumer or end-user, althoughbusinesses alsoconsume goods and services in the course of producing their own.
Physiocratic economists categorized production into productive labour and unproductive labour.Adam Smith expanded this thought by arguing that any economic activities directly related to material products (goods) were productive, and those activities which involved non-material production (services) were unproductive. This emphasis on material production was adapted byDavid Ricardo,Thomas Robert Malthus andJohn Stuart Mill, and influenced laterMarxian economics. Other, mainly Italian, 18th-century economists maintained that all desired goods and services were productive.[1]
The division ofconsumables into services is a simplification: these are not discrete categories. Mostbusiness theorists see a continuum with pure service at one endpoint and pure tangiblecommodity goods at the other. Mostproducts fall between these two extremes. For example, arestaurant provides a physical good (prepared food), but also provides services in the form of ambience, the setting and clearing of the table, etc. Although some utilities, such aselectricity andcommunications service providers, exclusively provide services, other utilities deliver physical goods, such aswater utilities. Forpublic sector contracting purposes, theelectricity supply is defined among goods rather than services in theEuropean Union,[2] whereas under United Statesfederal procurement regulations, it is treated as a service.[3]
Goods are normally structural and can be transferred in an instant while services are delivered over a period of time. Goods can be returned while a service, once delivered cannot.[4] Goods are not always tangible and may be virtual e.g. a book may be paper or electronic.
Marketing theory makes use of the service-goods continuum as an important concept[5] which "enables marketers to see the relative goods/services composition of total products".[6]
In a narrower sense, service refers toquality ofcustomer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently inretailing.[7]
Distinctions are made between goods and services in the context ofinternational trade liberalization. For example, theWorld Trade Organization'sGeneral Agreement on Tariffs and Trade (GATT) covers international trade in goods[8] and theGeneral Agreement on Trade in Services (GATS) covers theservices sector.[9]
