Public Goods

11 Key excerpts on "Public Goods"

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  Limiting Resources

  Market-Led Reform and the Transformation of Public Goods

  • LaDawn Haglund(Author)
  • 2010(Publication Date)
  • Penn State University Press

    (Publisher)

  In later chapters, I will build upon this analysis by evaluating how these organizing principles interact and/or clash in concrete institutional and political environments. I will then 24 LIMITING RESOURCES show how neoliberalism, by choosing a narrow view of Public Goods, pro- motes policies that shrink the pool of resources considered ‘‘public’’ and that preclude several important nonmarket alternatives. When Markets Fail: An Economic Approach to Public Goods The field of economics frames goods provision primarily in reference to markets rather than to the public or state. Markets are deemed the most efficient mechanisms for distributing goods and services so that nobody can be made better off without someone else made worse off. Public Goods are those that markets are unable to provide efficiently because of the char- acteristics of the goods themselves. In these cases, state intervention is justified to remedy or prevent ‘‘market failure.’’ Two criteria used to distin- guish Public Goods are rivalry and excludability (Musgrave 1969). Rival- rous goods are those that, once taken or consumed by one person, are not available for use by another, such as goods sold in supermarkets or fish in common waters. Nonrivalrous goods are those that are available regardless of how many people use them, such as policing and lighthouses. Exclud- able goods are those that can be denied to people without a great deal of difficulty, such as most goods bought and sold for a market price. Nonex- cludable goods are those for which it would be costly or impossible to exclude users, as with common land or military protection. Although many goods we consume are ‘‘private’’ in this rendering (both excludable and rivalrous), our most essential goods are generally ‘‘public’’ (non- rivalrous and nonexcludable) or ‘‘semipublic,’’ or ‘‘mixed’’ (either rivalrous or excludable but not both) (see table 2).

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  Political and Civic Leadership

  A Reference Handbook

  • Richard A. Couto(Author)
  • 2010(Publication Date)
  • SAGE Publications, Inc

    (Publisher)

  P ublic goods are goods that are consumed collectively, and it is not possible to exclude someone from con-suming a public good. For instance, a sea is a public good since all people, unless restricted by an authority, can swim, sail, fish, or draw water; or, for example, radio broad-casting can reach many people via radio waves, satellite, and the Internet. Another example is the national defense: Once it is supplied, it affects all citizens within the bound-aries of a nation-state. There are two main characteristics of Public Goods that differentiate them from private goods: First, they are nonexclusive in consumption, and their ben-efits influence the general public. All citizens, even if they are not contributing with taxes to the provision of national defense, can benefit and cannot be excluded from the ser-vice. Second, contrary to private goods, Public Goods are nonrivalrous, which means that they can benefit many citi-zens at the same time without any extra cost—or at a very low marginal cost. The cost of the national defense to the new citizens is almost zero. In a market society, goods and services are provided either through a market mechanism or through the govern-ment. Because of their characteristics, some goods have to be provided by the government. However, the provision of which goods—or which Public Goods—should be under the responsibility of the government is a normative question that has fundamental importance for social life. For this rea-son, we face different conceptualizations and classifica-tions of Public Goods. On the one hand, one can find literature full of discussions about the normative questions on Public Goods in different branches of social science such as in political science, economics, public administration, sociology, and philosophy; on the other hand, there is a large number of works on technical questions regarding the provision of Public Goods in the field of public finance.

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  Social Entrepreneurship Business Models

  Incentive Strategies to Catalyze Public Goods Provision

  • K. Sommerrock(Author)
  • 2010(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Public Goods theory The theory of Public Goods 1 originated in 1954–5 with ‘The Pure Theory of Public Expenditure’ – the work of Paul A. Samuelson, a future Nobel Prize laureate for Economics; while Harold Demsetz and Cliff Walsh detailed these original thoughts in the 1970s and 1980s. 2 Their definition proposed two central characteristics of Public Goods: non-excludability and non-rivalness. The Scottish philosopher, economist and historian, David Hume, established another line of discussion, describing the state as a collective provider of Public Goods as a consequence of market fail- ure; the works on public finance of Richard A. Musgrave and the public choice school of James M. Buchanan tie in with this line of research. 3 In this section, non-excludability and non-rivalness are explained as the characteristics of Public Goods. These characteristics are based on their externalities, which evoke the failure of markets for Public Goods as a consequence of free-riding and hidden preferences. As a consequence of market failure, the state is often engaged in the provision of Public Goods. Finally, the role of social capital as a specific public good is highlighted. 76 Theoretical Perspectives Characteristics of Public Goods Public Goods are defined by the two core characteristics of non- excludability and non-rivalness in consumption. 4 Non-excludability means that no individual can be economically or technically excluded from consuming the good. 5 The defining characteristic of non-rivalness in consumption was coined by Richard Musgrave, another important con- tributor to Public Goods theory, and means that the good can be used collectively by various users without constraining any individual from benefiting from the good.

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  Welfare Economics

  Towards a More Complete Analysis

  • Y. Ng(Author)
  • 2003(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  8 Public Goods In the previous chapters, especially Chapter 2, we were mainly concerned with an economy of private goods. But Public Goods are an increasingly important part of the overall economy, and in a certain sense are a special kind of externality in consumption. We discussed problems of externality in the previous chapter but our discussion mainly concentrated on one party affecting another. Significant external effects such as pollution (public bads) affect large numbers of individuals and can be regarded as involving an external diseconomy aspect and a public aspect. Hence this chapter is rele- vant not only to the more traditional subject of the provision of Public Goods but also to solving the problem of public bads, as well as other social issues that involve a large number of individuals simultaneously (issues such as the environment, health, knowledge and peace are Public Goods at the global level – see Kaul et al., 1999). 8.1 Basic characteristics of Public Goods What is the basic characteristic that distinguishes Public Goods from private goods? Of the several that have been suggested, two have been widely discussed. First, the same unit of a public good can be consumed by many individuals: its availability to one does not diminish its availability to others. This is called ‘non-rivalry in consumption’. Examples of goods that possess this characteristic are national defence and radio and television broad- casting. My tuning in to a certain broadcast in no way reduces its availability to other listeners. Conversely once I have eaten an apple it can no longer be consumed by others. Two persons may share an apple but they will each eat only half. Hence such goods as apples, bread, and so on are private goods. However there are goods that fall between the polar cases of purely public and purely private. For example books in libraries can be borrowed by different readers over different periods but not at the same time.

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  A New Approach to the Economics of Public Goods

  • Thomas Laudal(Author)
  • 2019(Publication Date)
  • Taylor & Francis

    (Publisher)

  need as proposed by Light (2000). This means that Public Goods are defined by the subjective perception of those using/consuming the goods and will vary between cultures, societies, and different economic welfare levels. A variant of this is merit goods. These goods should benefit the users/consumers even in situations where they are not in demand by the targeted customer/consumer group. Musgrave and Musgrave (1973) characterized the incentives or subsidies promoting such kind of goods to the less affluent as an expression of paternalism. The aim is to correct the market in situations where users/consumers lack relevant information. In the present text the need, or merit, is not referred to as a defining characteristic of a public good.

  The basic concepts describing Public Goods

  “Goods” : Refers to anything that is in demand by humans

  In a wider understanding, “a good” is defined as anything that is good, or something that has economic utility, or satisfies an economic want (Webster dictionary). We refer to “users/consumers” in contexts where the public good may be a commodity, service, or something consumable.

  1)

  “Shared goods” : A good where there is joint and uninhibited access

  A “shared good” is shared in two ways: First, the nature of the good demands that the good is shared among those demanding the good. There is an uninhibited access to the good and it is not possible for companies to appropriate the full benefits arising from their production or distribution of the good. Second; it must also be shared in order to be fully utilized : To benefit from the good it must be utilized by a group. “Shared” is associated with something owned, divided, felt, or experienced by more than one person (Cambridge.org ), or as something we have in common, or held or experienced in common (thefreedictionary.com

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  A Course in Public Economics

  • John Leach(Author)
  • 2003(Publication Date)
  • Cambridge University Press

    (Publisher)

  Police and fire protection, parks and recreational facilities, roads and bridges, and national defense are all members of this group. Goods that are non-rivalrous or partially rivalrous are called Public Goods. The market system generally fails to provide adequate quantities of these goods. The clearest demonstration of the problem arises with Samuelson’s pure public good, which combines non-rivalrousness with non-excludability. A non-excludable public good is one whose use cannot be controlled by the provider. Conventional (air-borne) radio and television signals are pure Public Goods. One person’s decision to listen to a particular radio program does not impair anyone else’s enjoyment of that program, so the signal is non-rivalrous. The provider of the signal cannot allow some people to listen to the program and prevent others from hearing it, so the signal is non-excludable. Non-excludability implies that the users of a pure public good cannot be charged for its use. They can enjoy the benefits of the good and pay for it, or enjoy the benefits and not pay for it. They will generally prefer not to pay for it, or to pay too little for it. Consequently, private firms find that the provision of pure Public Goods is an unprofitable venture. Pure Public Goods are more easily provided by the government, which can fund them from its general tax revenues. Other kinds of Public Goods – impure Public Goods – have different kinds of prob-lems associated with them. Freeways, for example, are a congestible public good whose access can be controlled. If access is not controlled, how extensive should the freeway system be? Increasing the capacity of the system to ease congestion encourages people to drive more often, so that the congestion returns. Building a freeway system with enough capacity to eliminate congestion cannot be the government’s goal.

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  How to Regulate

  A Guide for Policymakers

  • Thomas A. Lambert(Author)
  • 2017(Publication Date)
  • Cambridge University Press

    (Publisher)

  14 13 Even economists who are unwilling to say that Public Goods “have to be supplied” by the government generally maintain that government provision is the optimal solution – i.e., the one that will generate the highest net benefits for members of society. The leading law and economics text, for example, maintains that “efficiency requires that . . . nonrivalrous and nonexcludable goods should be controlled by a large group of people such as the state.” Robert Cooter and Thomas Ulen, Law and Economics (New York: Pearson Addison Wesley, 4th edn., 2003) 108 (emphasis added). 14 If the plans get too elaborate, contributors motivated by charitable impulses will stop giving. Those who are contributing because of idiosyncratically strong preferences or in order to attain 74 Public (and Quasi-Public) Goods Government planners with access to the public fisc lack a similar mechanism to tell them enough is enough. That is particularly problematic given that the funds the planners are spending are coerced from individuals who may not support the particular public good at all or, at a minimum, may want less of it. Pacifists, for example, are appalled at current levels of military spending; conservative Christians, at public funding of art projects such as the 1987 photograph “Piss Christ” (for which the artist received $15,000 from the National Endowment for the Arts); many secularists, at abstinence-only sex education (for which federal funding is available). In light of inevitably divergent preferences among taxpayers and the absence of any feedback mechanism other than the ballot box, govern- ment planners are likely to make significant mistakes in deciding how much of a public good to produce. But what about that ballot box? Won’t it punish (and ultimately prevent) mistakes about how much of a public good should be provided? Not very well.

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  Microeconomics

  Theory and Applications

  • Edgar K. Browning, Mark A. Zupan(Authors)
  • 2019(Publication Date)
  • Wiley

    (Publisher)

  • Show how clearly defined and enforced property rights can resolve externality problems and thereby ensure an efficient outcome. • Demonstrate how air pollution can more efficiently be controlled through the establishment of an overall industry pollution target and the assignment of tradable emissions permits to the industry’s firms. 510 Chapter Twenty • Public Goods and Externalities • Externalities are present when all of the costs or benefits of a good are not fully borne by market participants. For example, an oil refinery may not have to pay for some of the air pollution generated by its production process and may consequently produce more oil than is economically efficient. Individuals may not obtain a flu shot if some of the benefits of the vaccination against such a communicable disease accrue to society at large rather than fully to them. When Public Goods or externalities lead markets to generate an inefficient allocation of resources, government can intervene, at least in theory, with an appropriate policy that will improve things. This chapter analyzes how Public Goods and externalities may adversely affect the way resources are allocated by markets as well as the remedies, government regula- tion among others, to such impediments to economic efficiency. What Are Public Goods? The term public good, as used by economists, does not necessarily refer to a good provided by the government. Instead, economists define a public good by the characteristics of the good itself. Two are important: nonrival in consumption and nonexclusion. A good is nonrival in consumption if, with a given level of production, consumption by one person need not diminish the quantity consumed by others. Although this definition may sound peculiar, such goods do exist. Consider a nuclear submarine that reduces the likelihood of enemy attack. Your property and person are protected, and so are those of others.

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  Behavioural and Experimental Economics

  • Steven Durlauf, L. Blume, Steven Durlauf, L. Blume(Authors)
  • 2016(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Similarities The common feature in Public Goods settings is the existence of externalities. In Public Goods problems, individuals can use private resources to provide goods that have positive externalities for others. Since some social benefits are not captured by the individual making the decision, this results in under-provision relative to the socially optimum level. Self-interested economic theory, then, argues that these goods will be under-provided, justifying taxation as a role for government. Parallel to the Public Goods situation is the case of public bads. Here, individuals receive private resources by producing goods that have a negative externality for others. Since some social costs are not captured by the individual making the decision, this results in overprovision of public bads relative to the socially optimum level. Self- interested economic theory, then, argues that these goods will be over-provided, again justifying a role for government, here in regulation. (A number of models have extended the existing theory to internalize the externalities. In models of altruism – for example, Becker, 1974; Andreoni, 1989 – the utility function of one party includes the consumption of others. Thus, when an action creates positive externalities, the value from it is increased over the self-interested model. Charness and Rabin, 2002, posit that individuals care not only about their own consumption but also about social welfare directly. These other-regarding preferences can internalize some of the externalities in Public Goods problems, but typically the over- or under-provision problems are not eliminated.) The defining characteristic of the Public Goods problems described here, however, is the existence of positive externalities. My actions affect others, and I do not take this effect (sufficiently) into account in my own maximization problem.

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  Health Economics and Financing

  • Thomas E. Getzen, Michael S. Kobernick(Authors)
  • 2022(Publication Date)
  • Wiley

    (Publisher)

  Most health care, disability, and pension financing systems in Europe and Asia are “social insurance” operating under principles of fairness and solidarity rather than private actuarial principles (such as rating and payment according to risk category) used in commercial insurance. Justice is more than an abstract notion; it is necessary for the operation of society. Unless peo- ple believe that the system is fair and serves their needs, they will not trust the government, and it becomes prohibitively costly to force them to behave according to the rules. Pervasive cheat- ing will cause the whole system to break down, as will persistent discrimination. If members of a group think they are not being treated fairly, the group will lose respect for the law. At the extreme, they will revolt and perhaps set up a separate government that conforms more closely to their ideal of a fair system. 14.4 Public Goods and Externalities A public good is something that everyone consumes collectively. Law and order is a public good. So are clean air, the discovery of penicillin, and the publication of national health statistics. Pure Public Goods have two distinguishing properties. First, they are inexhaustible; therefore, once produced, there is no additional cost for having additional people use them (i.e., the marginal cost of additional users is $0). Second, they are nonexclusive; therefore, people cannot be stopped from using a public good once it is there. Private goods are exhaustible and get used up by con- sumption (a pill, an hour of a doctor’s time), whereas Public Goods (the formula for the pill, the discovery that eating foods rich in vitamin C reduces certain diseases, clean air) do not. If one patient uses a doctor’s time, another patient cannot. Yet if one patient uses a formula, clean air, or nutritional advice, the amount available for someone else is not reduced. Private goods are exhaustible; thus, if one person uses them, another person cannot.

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  Production, Growth, and the Environment

  An Economic Approach

  • William L. Weber(Author)
  • 2014(Publication Date)
  • CRC Press

    (Publisher)

  However, the movie theater can exclude people by requiring people to buy a ticket before they gain admitance. Point C represents a pure public good, like climate, which is both nonrival and nonexcludable. Point D represents goods such as highways or roads where exclusion is difficult, but there is some degree of rivalry. For instance, highways are rival when congested. During rush hour, when another vehicle enters an already congested highway, the average speed slows for the vehicles already on the highway. However, with the exception of toll roads, most highways in the United States are nonexcludable. At times, parks can also become congested such as on holiday weekends. Although some parks charge vehicle or per person admission fees, many city and state parks do Public Goods and Bads 149 not charge fees and are nonexcludable local Public Goods. Point G represents a common property resource such as an open access fishery or pasture shared by more than one shepherd. Common property resources are rival in that as more shepherds graze sheep or more fishermen fish, the productivity of the pasture or fishery falls. By their nature, though, common property resources are nonexcludable. Now, think of the kinds of environmental amenities and disamenities that individuals and society consume. The amenities include services like clean air, which is nonrival in consumption, but might be excludable for some, depending on the prevailing winds, elevation, and whether the location is in a basin. Pollution, an undesirable public bad, might be local in nature, like a toxic waste site, or it might be global in nature such as the effects of carbon dioxide emissions on climate. 7.2 Efficiency Conditions for Public Goods and Bads For private goods, individuals all face the same prices but they usually con-sume different quantities.

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