Some Notes on the New Age of Emergent Public Goods: Part One

I’m going to try to write some posts about public goods as part of writing something about the new age of public goods. As readers to this blog will know, I’ve got a bit of a thing about public goods, and most recently argued that Web 2.0 is the product of ‘emergent public goods‘.

But for now a taster. It’s funny when you investigate something and find something that really is very simple and basic and yet hasn’t been said before – or you haven’t seen it said before (but part of the point of this is that you can point out if it has been said before).

The textbook definition of a public good is that it’s something that’s both non-rival in consumption and non-excludable. And that textbook definition is wrong! It’s the definition of a (particular) public good problem.  To be a public good the good need simply be non-rival in consumption and whether or not it’s excludable it needs to be not excluded.  So Google,  G-mail, Twitter and Facebook are perfectly excludable – in each case the platform providers could exclude those who won’t pay them a subscription.  But in not doing so they choose to make these platforms public goods – and so maximise their social value.  It just so happens that they also make the judgement that their private value to them is maximised by maximising their social value – a nice confluence of interests.  But Google, G-mail, Twitter and Facebook are, I would argue, public goods notwithstanding their in principle excludability.

Anyway, I hope to return to this in some subsequent posts – in between watching the Pakistanis and the Australians battling it out on the field.

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Richard Green
11 years ago

I had a lecturer that described non-excludability along the following lines.

“Now the beach is a public good because you can’t stop people going on the beach. Well… I guess you could put up a fence and charge money at the gate, but lets pretend you can’t.” and went on from there.

Other examples given in text books (i.e bridges) often neglected the possibility of exclusion (tolls). I guess their focus was on the public goods problem and by extension government policy but the importance of excludedness is implicit in their examples, it’s just never made explicitly.

Which I guess causes problems when the textbook doesn’t get properly questioned as it is absorbed.

Still, saying the unsaid bleeding obvious seems to be a ripe ground for scholarly fame. I say go for it.

Edward Mariyani-Squire
Edward Mariyani-Squire
11 years ago

In his 1954 paper (in The Review of Economics and Statistics, Vol. 36, No. 4, pp.387-389), Samuelson glosses over the issue of non-exclusivity. It is not explicitly stated as such (the term is not used), but is embedded in his statement (p.387):

…collective consumption goods (Xn+1,

cscoxk
11 years ago

I think you are right.

Where we have true non rival consumption then excludability is redundant – but the nomenclature is wrong. Why not call them something that means “non rival in consumption” or magic puddings. We can still exclude but for reasons other than the lack of the resource.

Excludability is needed for those common resources where there is some limit and so there is rivalry in consumption. These are resources subject to the “tragedy of the commons”. That is, public goods are those resources where there is a limit but there are no ownership rules excluding some from the resource.

In other words “public goods” mean goods and services where the community owns the resources and access to the resources are achieved by means other than ownership – because we all own the goods.