Three Approaches to the Theory of Public Goods
Year: 2001 Volume: 51 Issue: 2 Pages: 111-125
Abstract: The paper focuses on a comparison of three different approaches that seek to explain the existence of public goods. First the mainstream Samuelson-Musgrave approach, based on the search for an objective nature of so-called pure public goods, is critically evaluated, especially with respect to the methodology it is built upon. Coase?s approach, arising from his crucial concept of transaction costs, is then revealed as being consistent with the mainstream Samuelson-Musgrave approach, even though it is not primarily involved with the search for an objective nature of public goods - it rather emphasises the spontaneous occurrence of public goods due to high transaction costs for their provisioning through market forces. Buchanan-Niskanen?s public goods concept is lastly described. According to this approach, the existence of public goods can be explained simply as a particular result of a purely subjective majority voting process. That is why efforts to seek out ?scientific? economic criteria which distinguish private from public goods are not only useless, they are completely misleading.
JEL classification: B41, H41, H57
Keywords: pure public goods; pure private goods; transaction costs; majority voting
RePEc: n/a
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