Principle of Private Goods:

Two Principal operate in this type of an economy:

1) Exclusion Principle

According to exclusion principle, those who do not agree to pay the market price for goods or those who cannot pay for it are excluded from their consumption.

Example

A consumes the good (milk) because be pays the price for it and B is excluded from its consumption, since he does not pay the price for it.

2) Revealed Preference Principle

Here, the consumer bids for the product and in the process he reveals his preference. The producer produces those goods, which  consumers want. Market thus operates on information given by consumers and those who fail to reveal their preference, are excluded from the consumption. Thus, private economy is concerned with the activities of the individual that are directed towards the satisfaction of individual wants.