Public cioods amd public allocation policy
Registration in:
978-3-631-75593-8
Author
Pethig, Rüdiger
Institutions
Abstract
In the Musgravean tradition the concept of public goods has become a central
element of the theory of public allocation policy. The basic argument for this
prominent role ofpublic goods is thatjointness in consumption - and possibly also
nonexcludability of consumers who are unwilling to pay - renders market
provision inefficient ('market failure'). Hence public intervention was called for to
enhance allocative efficiency. In recent years, however, quite a different research
program, namely the economic theory of policy (or public choice), provided
explanations for the working of public allocation procedures for public goods. The
thrust of this theory is that it is not at all clear whether the public provision of
public goods, per se, is apt to improve upon the market allocation. Public choice
economists rather identified various inefficiencies in public allocation procedures
which are sometimes paraphrased as 'policy failure'.
Most contributions to the modern theory of public goods are somewhere located in
the wide ranges of 'market failures' and/or 'policy failures'. ll This wide spectrum
is also characteristic for the eight contributions of the present volume: The first
two papers, i.e. that of M.E. Burns and C. Walsh and that of B.-A. Wickström,
study 'market' allocation procedures in the absence of public intervention - for
either costlessly excludable or nonexcludable public goods. The next two
investigations of R. Pethig and 0. von dem Hagen focus attention not only on
'exit' but also on 'voice' (Hirschman), that is, on voluntary or market activities
broadly conceived as well as on participation in political allocation procedures.
Political allocation procedures (voice) are studied in the subsequent contributions
by H. Hanusch and P. Biene and by F. Dudenhöffer who focus attention on
elections. A. Endres assesses the impact and efficiency of alternative policy tools·
for environmental protection. Giving policy advice presupposes a ~ormative,
comparative analysis of policy instruments and allocation procedtires. Scope and
limits of such an analysis are discussed by W. Blümel in the last paper of this
volume.