In 1985 Tyler Cowen, a Harvard graduate student, wrote a paper entitled: Public Goods Definitions and their Institutional Context: a Critique of Public Goods Theory. He proposes a new perspective on how we think about public goods and private goods. Remember, this was back in the day when the government provided public goods to constituents, and what private parties did amongst themselves and in the business world was mediated through a market process. It was one or the other.
The traditional definition of public goods focuses on the nature of the object or service in play. Does the lighthouse exhibit public qualities or private qualities? But Cowen proposes a new view.
The purpose of this paper is to tinker with the definition of public goods and show that nearly every good can be classified as either public or private depending upon the institutional framework surrounding the good and the conditions of the good’s production.’
One way that a good can slide between public to private is in the manner of its use. Roads serve as a great example. As long as only a few cars are on the road, the pavement appears to be public by nature. But once congestion ramps up, then the use of the road by a bunch of people may cut into another person’s personal time. The larger group of motorists impose a private cost on each other as they are no longer able to access the road without competition.
Furthermore Cowen points out.
Roads may also be more “private” if they are used for activities other than driving. To the extent that roads are used for parades, bicycling, or even littering, they are private goods.
The parade may preclude cars from the road, bicycles may obstruct a lane, and litter may decrease the marginal value of driving to everyone who dislikes litter.
Here I think it is important to note a feature that isn’t really specifically noted in the paper. He alludes that there are distinctions between consumers but doesn’t exactly set them aside. For folks who work third shift and are always commuting against traffic, the congestion never causes a privateness to their use of the road. On the other hand, the privateness of public road use is clearly seen when commuters, for a fee, can privately access an express lane in order to avoid congestion.
All the snow is just leaving the ditches here in Minnesota. And as the white stuff melts away, a crop of litter is strewn here and there. It’s too late to know who threw that Chick-fil-A wrapper casually out their car window. The garbage is a public expense to the city. Slowly neighborly people show up with empty plastic bags and walk through the soggy grass filling them up.
The trash that appears following a parade or a fundraiser walk around a scenic lake is another matter. This can be tied to an event and thus a group of people who have gathered on a certain day for a particular purpose. The detractors use the trail which skirks Lake Harriet for private use and produce a negative externality to others out on a Saturday stroll.
It’s important to keep track of the groups to meter out compensation. The chain of lakes in Minneapolis attracts events every summer weekend. The private use of public space generates trash, congestion, and parking inconveniences. For this reason, groups accept the requirement of a fee, paid to the city, for the use of what otherwise is considered a public asset. Although the fee is set by a park board or a city, the process includes thinking through who is coming into use the facilities and what other surrounding cities charge.
So the degree of publicness and privateness can be used to identify means of compensating factors. But at the core of determining publicness and privateness one must identify the groups, and whether the activities are public or private from their perspective.
What is surprising to me is that this is not a mainstream concept. Tyler Cowen is a famous economist who laid out this definition almost 40 years ago. Samuelson’s definition is often shown to have lapses in consistency- and yet it is still the textbook response. I guess tradition is hard to shake.
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