Julian Saurin @ Free University Brighton |
Goods : Public and Private
Goods and Types of Markets
Of LighthousesConsider the use value of a lighthouse.
And then consider the exchange value of lighthouses ... You might want to read the article by an extremely influential economist Ronald Coase called 'The lighthouse in economics.' There are a number of other articles which you might wish to read - although all are firmly in the field of orthodox academic economics - on the economics of lighthouses including responses to Coase. In this respect you get a glimpse of how academic economics develops through argument, criticism and elaboration. See the following list :
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Of 'Open Access'Read the article by Garrett Hardin misleadingly called "The tragedy of the commons." This dreadful but highly influential article should be called, If anything, "The tragedy of open access regimes".
Is this regime or market similar to or quite different from that of the lighthouse ? In what ways ? |
Public Goods, Private Goods, Club Goods, Open Access Goods
Economists often work with an assumption that there are basically four types of 'goods' or 'regime of goods'. These are private goods on the one hand and public goods on the other hand, with club or congestion goods and common pool or open access goods being two different kinds of mixed regimes.
In this model the two key considerations are (i) is the good characterised by excludability or non-excludability and (ii) is the good characterised by rivalry or non-rivalry ? |
A useful exercise is to look around you at the various goods and services that you encounter in daily life and ask yourself what type of good or regime best characterises your experience. For example - and very simply - look at the road that you're walking alongside. What kind of use value/utility does the road provide ? Well, obviously, it serves to allow people to travel over it, joing location A to location B. Which people ? Any people ? Again, keeping it simple for the moment, let's say just drivers of vehicles. Are some vehicles excluded from road use or can any vehicle use the road ? (What about pedestrians ? What about separate cycle or bus lanes ?) If a lorry uses the road does that prevent a cyclist using the road ? Are roads in any way 'rivalrous' ? Are roads basically some kind of public good or some kind of private good ?
And then ask, what happens when the road gets very busy ? Cars, buses, trucks, motorcylists, vans, pedestrians at crossings, cyclists, taxis, traffic lights, left turns, right turns, U-turns, and so on .... Perhaps roads are congestible and a road is a congestible good ? |