Quasipublic Goods 1

However, public goods like the lighthouse really are very special cases. A public good really is at one end of the specrum. Private goods, the kind we have been studying for most of this course, are at the other end of the spectrum.

We could define a private good as a good that has the following two characteristics. These characteristics are the opposite of the characteristics of a public good:

  1. Beneficiaries can be charged for their use of a private good without difficulty, and if they do not pay they can be prevented from enjoying any benefit.
  2. The marginal cost of the good is positive and at least as great as the average cost
The middle ground of the spectrum are the quasi-public goods. A quasipublic good is almost a public good, but not quite. That is, quasi-public goods share the following two characteristics:

  1. It is difficult or costly to charge the beneficiaries in some or all cases, but it is possible to charge at least some of them
  2. The marginal cost of the good is less than the average cost (that is, there are economies of scale) but not zero
It seems there are many more quasi-public goods than public goods. In saying that private goods are at one end of the spectrum, we are not saying that private goods are unusual. Probably most goods are private goods. The food we eat, the clothing we wear, our houses or apartments and furniture and cars are all examples of private goods. In neoclassical economic theory, certainly, both public goods and quasi-public goods are exceptional. But quasi-public goods are a less extreme and more common kind of exception.

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