| ManusJustus said: That private entity has to have the ability to force customers to pay. If a harbor operates a lighthouse or pays a private lighthouse by charging ships that land there it would work, but it will never be as efficient as a publicly funded lighthouse because there are ships that can still use the lighthouse and do not pay a fee. Maybe they dock eleswhere, just passing through, etc. In economics its referred to as a free rider problem. |
If you actually read my post, you would know that I agreed that a lighthouse is a non-excludable service; however, that does not prevent it from being efficiently operated by a private entity. The harbor benefits from paying for or operating its own lighthouse. When a ship docks, it will have to pay for the benefits it received. If a ship is passing through and does not pay at this particular lighthouse, it will eventually have to port and pay for the benefits it obtained. It cannot escape from paying for the benefits it receives. All the ports would eventually benefit, and the ports that do not make enough money would close because there is not enough demand for a port in that particular location.
There are also other public goods (goods that are non-excluable and non-rivalrous) that are distributed by private entities. Free television and free radio are both examples of public goods provided by private entities. Once a broadcast network broadcasts a television show, it cannot exclude anyone from it nor does someone watching it preclude someone else from enjoying the television show; however, advertisers pay the bill and government does not have to fund the public good.







