What is a Public Good? Private Good (Rivalrous, Excludable) Private Sector Commodity e.g. Painting, Chocolate Bar, Car Public Good (Non-Rivalrous, Non-Excludable) Operating Environment/ Infrastructure e.g. Museum, Food Safety, Traffic Lights Positive Externalities How much should be provided? How should this be financed? How to measure the value?
Public Goods and its Trade-offs - Positive and Negative Externalities of the Private Sector Pure Public Goods: global: clean air and water/ peace local/national: traffic lights, property rights Impure Public Goods: Food security (consumption of nutritious food benefits society as a whole). Private sector is the main provider and in charge distribute/produce/consume nutritious food. Public sector is in charge where the private sector fails. Politicized Public Goods: Agrobiodiversity, traditional knowledge, cultural identity etc. (externalities/value for whom? at what price (biodiversity vs. livelihoods?) Should common pool resources be managed on a private basis monitored by a global trust? (Distribution of property rights to avoid Tragedy of the Commons (Hardin/Coase) Is the private sector able to improve the quality of collective goods by making them club goods?
The Character of a Public Good Non-excludable Non-rivalrous Excludable Rivalrous Global public good (clean air) Fighting global public bads National Public Good Club Good Private good Common pool resources knowledge
New Strategies for the Provision of Public Goods The nature of public goods has changed as a result of technological change in the private sector making –privatization feasible and –good and bad externalities better measureable Technology permits smaller producers and more scope for competition (e.g. gas-fired turbine generators) Technology permits unbundling of physical network and related services (more competition in the provision of services)
Making the management of public goods more effective Traditional Public Goods & Bads - public production, no exclusion, no rivalry Rivalry Excludability Private Production/ Technology/Market Incentives Traditional private goods Privately Produced Public Goods & Bads Club Goods, Tradeable Pollution Permits