Book contents
- Frontmatter
- Contents
- List of Figures
- Preface
- 1 Introduction
- Markets
- Externalities
- Public Goods
- 10 Pure Public Goods
- 11 Two Examples of Pure Public Goods
- 12 Impure Public Goods
- 13 The Link between Public Goods and Externalities
- Imperfect Competition
- Taxation and Efficiency
- Asymmetric Information and Efficiency
- Asymmetric Information and Income Redistribution
- A Note on Maximization
- References
- Index
13 - The Link between Public Goods and Externalities
from Public Goods
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- List of Figures
- Preface
- 1 Introduction
- Markets
- Externalities
- Public Goods
- 10 Pure Public Goods
- 11 Two Examples of Pure Public Goods
- 12 Impure Public Goods
- 13 The Link between Public Goods and Externalities
- Imperfect Competition
- Taxation and Efficiency
- Asymmetric Information and Efficiency
- Asymmetric Information and Income Redistribution
- A Note on Maximization
- References
- Index
Summary
A community league operated in the neighbourhood in which I grew up. It was funded by the families living in the neighbourhood, and had a number of functions. One of them was to operate an outdoor skating rink each winter. Particular time slots were made available to figure skaters, hockey players, and recreational skaters, but if you were prepared to change into your skates outdoors, you could use the rink just about any time. This rink would certainly seem to fit the description of a congestible public good.
Some parents would also construct smaller rinks in their backyards, so that their younger children could skate without having to walk to the community rink. Since skating alone isn't much fun, these children generally had the company of other neighbourhood kids. Arguably, these parents were providing for their own benefit a good which had positive externalities for neighbouring families.
These projects are intrinsically very similar, and yet we do not hesitate to categorize one as a public good and the other as a good with positive externalities. We hope that the distinction between these two goods is a useful one, and indeed our analyses of the two goods have been quite different, but this example suggests that we might be making strong distinctions between quite similar goods.
One might argue that the backyard rink offers distinctly different benefits to the family that builds it than it does to other families, and that it should therefore be categorized as a good with externalities.
- Type
- Chapter
- Information
- A Course in Public Economics , pp. 200 - 216Publisher: Cambridge University PressPrint publication year: 2003