The key difference is that the ability to exclude implies the feasibility of charging for use. Charging club members can be an efficient way of recovering costs. In the case of a private good, people can be excluded from its benefits at low cost, and its use by one person conflicts with its use by another. There is a strong case for recovering the costs of a private good from those who benefit from it. In the case of a merit good, the community as a whole desires a higher use of the output than would be likely if it were charged for at full cost.
Merit goods combine elements of both public and private goods.
This may provide an argument for charging at less than full cost. However, many such goods are produced under market conditions, and are charged at full cost, so this argument is not conclusive. For the argument to be sustained, the loss in public benefits from charging at full cost would have to be significant. 3.3 Externalities and Risk Exacerbators Check that the analysis takes into account any positive or negative externalities that affect the outcome, and in particular identify any risk exacerbators. Conversely, negative externalities involve harmful effects that extend beyond those directly involved in some activity.