Public goods

Rival interpretations

The concept is often interpreted to mean that non-rivalous and non-excludable products and services can only supplied by governments. That interpretation was challenged by Ronald Coase, who pointed out that English lighthouses had been privately supplied and financed in the 19th century. The broader interpretation adopted in this article follows Samuelson in stipulating only that they cannot be paid for by individual users - implying that, unlike private goods, their supply cannot respond to the normal action of market forces. But it does not exclude the possibility that they could be collectively financed by the private sector. It is widely assumed that the scope for the private sector financing of public goods must be limited by the opportunities it affords for "free-riding", but Elinor Ostrom has demonstrated ways in which that obstacle can be overcome. Public goods that are financed by the private sector are not in fact uncommon. Citizendium, for example, is non-rivalous and constitutionally non-excludable, and is thus a public good although it is financed by voluntary contributions from its supporters. It is neverthless true that most public goods are government-financed, and in popular usage the term is often applied to government-financed products such as those roads and bridges to which access is not restricted - although such usage is not consistent with the non-excludability criterion, nor with the fact that toll roads and bridges can be provided and financed by the private sector. Since, however, the distinction between public goods and the broader category of collective goods depends upon the technical possibility of exclusion, it can be blurred by doubts concerning methods of exclusion that are possible but not available - or possible but not commercially feasible. Whether the global positioning system should be categorised as a public good, for example, turns upon the feasibility of coded access.