Common Property and Public Goods

Steven E. Landsburg

Chapter 14 in Price Theory and Applications, 2024, pp 569-589 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In Chapter 13, we learned how incomplete property rights can lead to inefficiency. In this chapter, we examine some important special cases. One is the theory of common property, which is property that has no owner. An example is a lake where anybody can fish and for which nobody has the authority to charge an admission fee. Another topic is the theory of public goods, which are goods that, once produced, are costlessly available for use by others. An example is a streetlight you install in front of your house, which illuminates your neighbor’s properties for free.Each of these theories is a topic in the theory of externalities. The user of a common property resource imposes a negative externality on other users, so that such property tends to be overused. The producer of a public good creates a positive externality, so that such goods tend to be underproduced. We explore the nature of these problems and examine some potential solutions as well.

Keywords: Microeconomics; Price Theory; Supply and Demand; Demand Curve; Adverse Selection; Budget Line; Indifference Curve; Common Property; Competition; Competitive Industry; Constant-cost Industry; Consumer Surplus; Producer Surplus; Social Gain; Social Welfare; Efficiency Criterion; Economic Efficiency; Cost; Price; Deadweight Loss; Price Ceiling; Tariff; Rationing; Quotas; Equimarginal Principle; Price Discrimination; Monopoly; Two-part Pricing; Two-part Tariff; Fishery; Collusion; Income Effect; Substitution Effect; Normal Good; Inferior Good; Giffen Good; Externality; Property Right; Coase Theorem; Transactions Cost; Law of Demand; Marginal Cost; Marginal Revenue; Marginal Value; Market Failure; Moral Hazard; Nash Equilibrium; Normative Criterion; Positive Economics; Oligopoly; Hayek; Social Cost; Economics of Information; Sales Tax (search for similar items in EconPapers)
JEL-codes: D D04 D4 L11 (search for similar items in EconPapers)
Date: 2024
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