The Private Provision of Public Goods: The Lighthouse
According to the standard economics textbook, a Public Good will be inadequately provided by the private sector; its characteristic of non-excludability may lead to the free-rider problem and thus difficulty for the provider of that good to reap compensation. This market failure creates a role for government intervention in the market to provide Public Goods. In this paper we question the need for public provision and document the private provision of that favourite example of a Public Good, the lighthouse.
Index Terms - Government Policy, Lighthouses, Public Goods