Public Goods

Public Goods and Market Failures: A Critical Examination, ed. by Tyler Cowen (New Brunswick: Transaction Publishers, 1992). A very useful collection of articles on the theory of "market failure," including critical assessments, empirical studies, and contrasts with "government failure." Essays include classics by Paul Samuelson, James Buchanan, Ronald Coase, Harold Demsetz, and others.

"Public Goods and their Institutional Context: A Critique of Public Goods Theory," by Tyler Cowen in Review of Social Economy 43 (April 1985). Perhaps the most powerful legitimating rationale for governmental action today is the assertion that the market cannot produce certain goods and that through government we all agree to coerce ourselves to produce these goods. Cowen provides a useful corrective to this theory of public goods.

"Equal Access vs. Selective Access: A Critique of Public Goods Theory," by Kenneth Goldin in Public Choice 29 (Spring 1977). Shows how the "publicness" of a good is not an inherent characteristic of the good itself, but of the manner in which it is produced. Any good can be either a public good or a private good, depending on the choice of production methods. (Included in Public Goods and Market Failures, ed. by Tyler Cowen.)

"The Lighthouse in Economics," by Ronald H. Coase in Journal of Law and Economics 17 (October 1974); reprinted in Coase, The Firm, the Market, and the Law (Chicago: University of Chicago Press, 1988). An important study of how what was until recently commonly cited as a public good incapable of production on the market (because consumers could not be excluded) was indeed produced through methods of exclusion (fees charged at ports). (Included in Public Goods and Market Failures, ed. by Tyler Cowen.)

"Tie-Ins and the Market Provision of Public Goods," by Daniel Klein in Harvard Journal of Law and Public Policy 10 (Spring 1987). Shows how "public" goods are produced by being "bundled" with "private" goods; gives numerous examples.

"Free Ride, Free Revelation, or Golden Rule?," by Earl R. Brubaker in Journal of Law and Economics 17 (April 1975). Shows how the problem of revelation of demand is overcome in cases where "free riding" can make provision of public goods difficult. (Included in Public Goods and Market Failures, ed. by Tyler Cowen.)

"Public Goods and the Theory of Government," by Joseph P. Kalt in Cato Journal 1 (1981). Shows the incoherence of the contractarian "public goods model" of state action. If coercion is needed to produce public goods, and the existence of a provider of public goods (i.e., the state) is itself a public good, then the establishment of the state would require coercion. Highly recommended.

Social Contract, Free Ride, by Anthony de Jasay (New York: Oxford University Press, 1989) This is a very accessible and brilliant treatment of the "public goods" justification of the state. Jasay criticizes careless use of game theory in finding omnipresent "market failure," and shows the self-defeating nature of social contract arguments that justify the coercive state.

The Limits of Government: An Essay on the Public Goods Argument, by David Schmidtz (Boulder, Colo.: Westview Press, 1991). Schmidtz shows how the "free rider" problem is overcome in voluntary market arrangements through "conditionally binding assurance contracts"; this is a careful treatment of a difficult problem, using game theory and experimental economics at an accessible level. The book also includes useful and interesting ideas on property rights and on justification in political theory.

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