4. Equal Access vs, Selective Access: ‘A Critique of Public Goods Theory Kenneth D>Goldin More than twenty years ago, Samuelson published his “Pure ‘Theory of Public Goods” Re ean dy thats sone ofthe most tlegant theories of modem times. For more than twenty Yeats those who admire this theory have searched for equally elegant realworld examples. Bat this has beens frastating search. Case aller case, although intlly plausible, has fled to fit the feame- ‘work of pullic goods theory. Faith in the relevance of Samson's theory hs remained: i one eample docant heh surely there rust be others. Bat so many examples have been analyzed, and found wanting, thatthe time has come to make te opposing argument he pure theory of public goods san elegent theory withont significant application. Furthermore, isa dangerously misleading thery i ‘suggests to the unwary that government servies should be Ine asf they were pubic “he evidence niggeas that we ae ol faced with ast of goods and services which hive the inherent characterises of public oods, Rather we are faced with an nvoidable choke reguding pod or service: shall everyone have ep aces to hat Seve fn which cage the sevice wil be smiar to a peblc good) {shal the service be avaliable selective to some, but not #0 ‘ters? In practice, pubic goods theory ie often used in auch = ‘ay that oe oreo is npn chaie pele, ten Suggested that a certain service fs publi good. And once Suggestion Is made, ils wally assumed tht the service must be equally zvailabe o everyone. Bt this is seriously mislesding 49, igoncral, equal acess fo government services ie neither nec= sry norefisent. : Reon br exmlson nn Pele ie 9 177 S71eestor i rie TugoRy oF Maer or cmmple, coneume-s wishing te contro! intets nu chadst © tel tcl goverment ire an airplane ro spray the entire tocnt, fice, insect control is offen clrsie! as 2 publi good. Ae with other public goods, everyone in town bis equa! acess to the aicplane spray. The equal access festure can be justified ia two ways: excluding anyone from the airplane spray i inpossile and since nothing is saved by doing so, exclusion is ingen, But consumers seeking insect control have 2 choice. (Tullock, 1970) They can each buy spray guns and spray their own yards, Al, though this may be mare costly than airplane spraying, efficiency does not depend on costs alone. Hand spraying allows greater diversity in chemical, timing, and extent of spraying, and may yield substantially greater benefits (CE. Buchenan, 1970) This ‘example is intriguing for two reasons. Ft il shows that consume, ers have a choice of distribution system. They may choose to give, everyone equal access to isect contol airplane spaying) or they » may choose a distbution system (hand spraying) which allows. ‘unequal or selective ects to insect control. Second, the evammple’ forces a overlook a cots. With Nand spraying. it a clear that serving more persons has added costs (fr addtional chemical equipment, and labor). Sinlaly, resources are saved sehen some: cone is excluded from insect contral. Dées a change in dittbuton system (to airplane spraying) make it costen to serve adda persons (s0 thal “nothing is saved” when someone is excluded)? Ke oy seem at first glance that neve resident nthe town wil get the same protection without added cst, bit this wil be irae ly ifthe new residents live within the existing town boundaries an ‘engage in no Insectstracting activites (uch ae allowing exposed water or gatbage to stand outdoors). Ifthe new residents cher live onside the town perimeter, or engage in insect atrarting activites, or both, than serving Sham wil involve added cost Either more sicpane timeand cheadens must be used (o masta protection levels), or the same inputs em be used to provide reduced protection (which sa cost the original residents) Thus, {or both disteibation systems (equal access and seloctive access), f 4s ly to sero ational persons, excep inthe special cases men- tioned above, (Aiplane spraying to contol mosquitos is no longer comiion in te US, but iremsins asa textbook case) “At Jest for this ample, iti poniess to asi the Service (Gnseet contol) as a public good, as it may be distibuted with sither equi or selective access. The eliient choice of dstbution "POUAL ARSE vs. SeLecTIVE cents * TA fayatem isan empirical matter, aid cannot be found by a priori dezalfication. This coneiusion also hele fa many major goods azud services, iraditionlly clasalfied az puilie goods or externali- fies. (See Section Ml: Case Studies) Atleast for the many eases studied 1. Consumers have a choice of distribution ayetem. Since itis generally costly to serve additional sees, the choice between equal and selective access isnot trivial. 2. The normative recommendation, that equal cess is efficient, ‘annot be based on 2 priori cassfiation. For each service, am ‘empirical comparison ofthe benefits and costs of equal vs. selective ‘access ip necessary to determine efficiency. Such empirical studies donot exist. 3. The simple positive analysis, that there is equal access to ‘goods clessfied as public, becruse ths isthe only posiblily, is ‘ot adequate. Since there is2 choice, it is necessary to explain why ‘equal actess is chosen over selective access. ‘This study suggests that there are no goods or servicés which «are inherently public goods or externalities; that there is ahamye a choice between equal and selective access; and thal there is gener- sily an additional cost to serve additional persons. But this song, theorem con never be proven, as counter examples may always be found. However, considering the range of case studies in this paper, it seems unlikely that any important exceptions vill be found. ‘This paper does not eal with the issues of who supplies 2 good (government vs. business) nor how it is financed (lesation va pices). The focus is on the distribution of goods (equal vs. sele~ ‘ive). There isa tendency to equate oqual access with tax financed government supply, but this need not be the case: government ‘supply often involves user fees and restrictive regulations (. selective access). So. arguments in favor of selective access deal ‘only with access; they do not imply a case against either govern ment supply or fax financing. : ‘The troitional interpretation of public goods theory (section 1) fs followed by a reinterpretation (secon M) and cave studies (fection I). E Traditional Scenario ‘A. Chsifton Modera pubic goods ticory begins with Samnezon's sparse and eegoat statements, (1952 358 Some goods, lke naberel‘72 Devexonwente rue Tasty OF MARKETS defense, are clasifed as public or collective) goods. Other gods, eras 37 lansled to non-public goes (Smuelson uses the Te ea ed olectve™ interchangeably.) This atte to an eaehtcads a either 9 pubic good or not» publ ood, i ae te oes ther economists Coods lik pluton con- ca veo dateyence ae routinely cassied as public gs, eee car cyper af food, clothing, shelter end tanéport are wane met ole good Tadtonally,theft-each gordi ‘setited a ener a gic good or not a public goad. Chekce RMS Sta selective dntbution fora glen service (ike airplane vs. hand spraying, for insect control) usually is Hot consid+ ord 2 Eyual Acses(Neraiined Te ates io casted as a public good, then i shuld be beled ia nape gies everyone equal acess, Why? The Ferree ney. By Sumas’ detinion, ise to ae eam ange public good Ifa public goo supplied Soe et be equal avaiable 0 eetyone. ls. eee Pen oy place diferent vals om the good, each and ane equ acess to he serie, bec exclusion is See FeO tenate te word “everyone” must be taken with» dere Ose fe puc goods are aa fo everyone in snot star ble goods ae equaly able 0 everyone eed ou, buch everyone in x nation, sae or town, in ae one ina two-peron neighborhood. Thus, public Sete rn the femal fom Oe International level lo two-person seetnals, anuelon, 3969) Since the peaity of pbc eet aited t's small group, itis necessary to be more seas oat “posit of exclusion.” Fora pu god, iis Pre eta cated anyone fom ler he group receving the tS (pe oevice tel Hence ar pollaion in Los Angeles eG Saute ss public god, if na ane ean be prevented from ae coving to LAL or fom enjoying LAs polation control sere eur Shoe wining pools nota pubic good. Aout sifu ee cit oe cee aan ree the pou Otel guests) reching the servic ian cent of aod publ ged the one ie plo fey. y Saal’ Gefiiton, oa ee” of po on aan se cit the pomp towtch a publ goodie upped there Equat Access vs. Seuscrive Access. 73 {sno subtraction from any other individuals consumption ofthat food. ..” (Samuelon, 1954) To it this definition, a public geod Eat be subject to congestion. an additonal user did couse (or increase) congestion, then there would Indeed be a subtraction from ether individuals’ consumption. Buti everyone can use the Sime unit ofa public good without congestion, then there i no rivalry among. consumers So there ae thie way to ‘express thie {important characteristic of public goods: eeryoneconsues the ste te oe congestabe; nor-isles. Bul in terms of economic theory, all three torme have 2 common meaning: a zero marginal co! of ‘ering edition persons The public good ise is costly, and there is agreemient that supplying more ofthe publie good (eg., more soldiers) has a positive marginal cost. But by definion, the mar- final coat of ving additonal persons is zero, and herein lies the Second basis for recommending equal access. As long as itis Geclnss to serve adallional persons, tls inelfient to exclude Snyone, no matter how lie he values the service. Exclusion educes benefits witost reducing costs. Tobe more recite there Eno ineffidency in excluding persons who get no benefit fom the ‘good, und it ght be effident to exclude those persons who alte the public good (excluding pals from defense). But ‘ince exclusion ie impossible by definition the point is trivial. “The traditional scenario, then, is to cssfy some services as public goods. If these servis are worth having at al, then Ereryane shouid have equal aces, for reasons of necessity (excl Slay is imposoible) and efficiency (eero marginal cost of serving adaltonal persons). This scenario is based on Sarueson's defini ton of a public good, Although ether definitions of public, or txllecive goods have appeared, the definition used here is neces- sary if one is louse the familiar graphic analysis (.g., Musgrave fd Masgeave, 1976, p59) in tat analysis demand (or marginal ‘enti curves ae added vertaly, which is meaningful only if tcryone consumes equal quantities, Also, the marginal cos line {lor'more units of the public good, eg the marginal cost of Soldiers) is drawn independenly ofthe nunber of persone served. ‘hiss meaningful only he marginal costs of serving addtional persons is zero. Tris alsgtradional to note that some activities (ke education) yield multiple outputs, IC spme of these are classified as pubic, Ind ethers nonpublic then the atvty ian inure or qua! public good. For those culputs which are casaifed as public, equal necesc4 Divevomeare ee Turon oF Manners in justified on the basis of necessity and eificiency. that f, ak ‘dash the activity may be impure or quasi, the normative recom inoue one are filly applied to that Part of the output which is assified as public good. C Eyual Access (ostive) “The traditional interpretation of public goods vaslly simplifies positive analysis. Why do consumers have equal acess to pubic Peds? Because excitsion is impossible. Why’ has there been Broorth in the. pert of output tO which consumers have equal ares? Because of a shift in consumer preferences towands those: aehces which are classified as public goods. These questions are Sich more difficult to answer i consumers have 2 choice of “istabution ayetern (equal ws. selective access) for every service. 1, A Renterpettion “henlaat cero then, tht ts wef to sy ome Fe enene Sa the for publ goods equa ces both Sond i fle, But annyise wide mange fv stadis aa equ arcs enter necessary nor fice, 20 that sea a Pape god asp not etl Rater, the Clie rues low ovo generoRasons: San doef drat spon, Goods ay be si ee 8 ono that eveyone has equal accesso the ae nat member inthe grow reeling the erie st eg re Sto bane goo ety, by encdingsome Wiese De rm te arve o rom te Group f0 wih he esos oe ie Dsubuting edecively does nat mean opt serve ution item nse for eal acess (ach a= so g)and then tlepting to entude peop th my aan ai), Fater, exasion may rere 9 dination Ra rae ecw ace inthe ist pace (et band Pa) apt speci sential cabs elf goods ad er ese, thee gs rary emang consumer, sere gn cost fering seorel pesos spe. The a aye etd elvan. For example cnt eet taal pesos they don't use these of so nt saree es theres re an enough oy Server TOT ar ech empha work tobe done, Thos ister ount Access vs. Sexscrive Access “75 ested in normative policy recommendations may investigate the tosis and benefits under the two disteibution systems. These will Gepend on the technology of exclusion devices and the diversity vidual preferences. Both factors change overtime: elfciency say dictate equal access now selective access in the future. The Cficen distribution system is not an unchangeable inherent char- ‘acteristic ofeach service." Those interested in postive economics ray investigate why equal access is chosen for some goods: selective access for others. What is the mechanisin leading to these chojoes? Are the choices efficient? “There is also-a need for further theoretical development. When goods and services are congestable, then various qualifies are omsble (such as crowded and uncrowded beaches). Given diverse preferences, efcient resource allocation may dictate the simulta- Feoussvalbiy of two or more qualities. (Goldin, 1972) But the ‘optimal mix of qualities may be difficult to specify, since both SStmands and cvs sre kel tobe interdependent. (The problem {similar to specifying the optimal miz—and nat the optimal ‘ypelaf fresh, frozen and canned orange juce.) This sa general ‘equilcium problem, much easier solved in principle than in practice, I, Case Studies (3. Major Goverment Series “These services are “mor” i the senae of expenditures (Je bey ‘docttion, oad public interest (police, outdoor a and scar ltere ightboues). Although many people toncua sss ee ern, seme inf een anc solecive atest le sometimes observed. Forth, all these Services ae congestble. To rv moe person win! ncensed Congestion tis generally necessary to provide more facies. ‘Atcmaiely, more pecon canbe served wang exiting facie tony by ncesing congestion and providing» lower ually fervce which cost athe exiting Users}. Adina! persons tn be served wilt adlonal cot ony in what are esentily ‘ta ad Soop (90) nt at mt eves can brn ie 9 -atng ce evi” meds Sable wih gel SEER fran pein av nk ened Tarte makclg mae re Meode dns pa ood Sitewnincl neediienty teeter ede! G3076 Devexoroes Te THEORY oF MARKETS sesh 2 I dn fe apt Ra ce ger i ein ee lag nan Sel a a a an Hoy Su ge a yt oe rerun on ining ena a ra Fee ace an ry Fm es ote a eee a a aoe are gree Seon 0 nes ye wal pore dr i Ot Os at here a oe sn et nae ithe rien se eS ae aranatly eT a yu un ane cataght dad aS wg ts 1-70 nt es ee ert tt ae ee bee is eh ef ita A as i frecte mamngira te hcl fs cee ntl tot th eee et tvs ‘rather into «colsion vise. Hence tn be fice to etude Smith frm [Equa Access ve. SELECTIVE AccESE 77 screening device. Access can also be limited by rules. On some California freeways and bridges, special fast lanes are reserved for buses and ear pools. This is not to say. that these examples of, selective acces are necessarily efficient Rather, there is no prior ‘ase for equal access to all roads, because exclusion is clearly possible, and il is generally costly to serve additional persons. Positive economists should explain why we hive chosen equal access to most una ll ends, Education. Schools produce several outputs. One's the education ‘of suidents, considered here. Other outputs may include research ‘and decisionmaking, and these are considered separately in Part B. ‘Most American children have equal acess to their neighborhood ‘public school (or to other public schools If their parenis move to ‘other neighborhoods). Although many children may go to the ‘same school, serving additional students requires additional teach- ers, books and schdolrooms. Allematively, additional students can ‘be crowded into existing classes, thereby imposing costs on other students, who now get less attention from the teacher, less play ares, etc. There is no costfor serving adalitional persons only (i) if they don’t use the public schools, sich as families without chi dren, or families who séhd their children to private school, or (@) for.the frst student in any otherwise empty class. Since costs are generally positive, it may be elfcent to exclude those students ‘whose marginal benefits are less than the marginal cost of educal- ing them. Selective access can also make avalable a choice of ‘quality, such as large and emall classes, ‘Not all edveation is distributed with equal access. Esely Ameri- can schools were mostly private. (West, 1967) Today, some public school distyctshave special schools for selected students, and private schools charge tution. Most state colleges use a combina- tion of rules (minimum grades) and fees. These examples of selective access are not necessarily efficient, but early there is 3 choice between equal and selective access, Since it i generally ray to serve additional persons, there is noa prov dfcency case {og equal access. Of course, one can argue for equal access to ‘ciols on egililarian principles. But the traditional public goods theory altemps to justify equal cress on efficiency grounds. That ‘argument does not hold for education. ‘Defense fon (Iulernal Crine. If policemen are assigned to cruise slong every stecet check every property, and respond to every call ‘thou! charge, then everyone has equal access to “defense fromFe Dewsonverr rin Turoav of ante ‘ize " Bat os communities gros, and mare residents must be supplied with , “ae defense, most communities hire more police men; clecrly ar ‘creased cost. If more policemen are not hired, then new 12sic 5 can be served only by decreasing service others: more streets can be patrolled ony if there are fewer patrols per night; more properties can be checked only if each one iz thecked less thoroughly, and only the more urgent calls can be responded to. Each of these service chenges imposes costs on resklents. Either they will eulfer from more crime, o> they will Incur the costs of purchasing other types af crime defense. Many types of crime defense are selectively available such as locks, fenzes, guard dogs, guards, and also alsrm companies which ‘respond Ifthe burglar alarm is tripped. And don’t overlook private police patrols, which check selected houses on selected streets, a Thoroughly and as often as each customer requests, for x fee, Selective access to police patrols is efficient If i excludes those persons with low marginal benefits relative tothe marginal cost of Serving them. It is costless to serve additonal persons, if the Additional persons live within existing buildings, and have neither sealable property nor criminal tendencies. jens from (External) Attck. if all Amésians are equally pro- tected from foreign attack on ther persons and possessions, then. everyone has equal access to national defence. Although this is substantially the case, there is certainly some variation in prot tion, especially among cites (regarding protection by missles) and among Americans who elther travel or have property abroed. (While the troops may be sent ont to protect some Americans oF thelr property from some foreign seizures (such as the Mayagues}, |n other cases no action is taken (tuna boats),) One of the fiery embedded myths of modern public finance is that it doesn’t matier if population increases: the costs of defending the US. from ‘external attack will not change. But consider two points. First, the ‘new population must live somewhere If they cause anincrease in the US. land area, then elther more defenses must be provided, of there will be a decrease in the level of protection to earlier residents, and either way the marginal cst of protecting additional pereons is positive. (Surely providing equal protecion to each of the original 4,ptates ig less coslly than providing the some level of protection to the 43 states plus Alaska and Hawail.) Second, even if the new population resides within the existing boundaries, they crease the amount of physical and hucian wealth Bova Accs vs. Sascnve Access 79 ‘which might be coveted by an enemy. That, forsign attack i at lee partly) n economy motited action, and s ene ily cer if there i mane capital worth exptaring. (Coveted cxpital Seip heen cetera {ve physical copia Thompson, 1974) ) Ths new population, By Increasing the likelihood af attack, requires the provision of nore defenses ifthe degree of protection i to remain changed. To sum up, itis costes to serve additonal’ persons only in the {unlikely case that additonal persons Ive’ within the "atone! Boundaries and case na increae inthe amount of expla that might be coveted by foreigners Bat (or defense against foreign attack, is sléctie access poste Die? Belore the modem erg, ory a few people had thare than sulsistence capital, and these lords often had personal adies (0 deter both intemal cine and foreign atted). Private axles tl seis today? These perbral atmies Yield Benefits primal to their cwner. (A medieval lord could scarcely be a “fee rider” on « neighboring lords defense efforts. If he did not have his Grn defenses, he would probably sues attacks from his neighbor) Does this imply hat every American “should” have his own any? (Of course not. For most Americans, equal acess tothe defenses of commural army is fat more efficient. Bat even ith» comune zal anny, selective ecusion is posse fom sone aspects of ts fefenes. It may not be possible 16 excfude anyone fom "protex. Son against assive mieearatac.” Batis not the only Service renileed. A military fore also protects people from thal of property andskidnappinghy foreigners. Exes fon thi service ‘Scelatvely easy: The maitary force simply males no allem to sop hell or kidnapping ofnamed persons: These pereens would iter hire their own giatde, or sullar the damages of theft or Kidnapping by foreigners. ulock, 1971, Appendix A) Americans with substantial property abroad or at sea inight well prefer to !provide ther own antithelt defenses, rather than pay fr com. (tor so ey Cn nn with ry pret ea by US" seen n Leon scoop Velera pong ef eles ole the preset reat "Bs te peated hace Sele ae Ae pretietl panes eaoking Deira, whee he guia bya 7.Sobee Fels Sing (p 1 Farthemore ws Vier ey Seek te in ro Seba" vt peng wees eso grade ane meen ESSfo Devetomuecrs 1 Tony 6 MAniErE \v which cannot be counted on te protect their property. a gw communal ary mn be ef fF AI ef the tine, tie san empirical nal A 9 ms ann Contrary te ple gdeds thor ever. this Fr cor tee lp externa lack, excision sno imps Ae Se Pe aepal cos of serng inal perains ener eter ve treme on as ere ‘hough there is proba am erp one Mo an There a il any frets. and bce. 1 a re hes eGuel acess. Bul even in wilderness ates, Te Cnt ofan dona seri nol 20. AS more Soe erry ders ter wes compan of “ver 2 fence And te congestion at more accesible parks Sy pee Stews To serve adllonl users, ether more and rn peter nt be ecuied or the ational users ll impose nt speeches is cones ere sdona emnes Sar es acho never se outdo erelion forte rst oe Pere atnenize empty fly: Clearly ts effetent 10 eet dace usc withthe lowest marginal Beefs and some Sade te csinglyoncuing. Many complies and doy se aecntee subject to feessand many wilderness areas restrict ciry re ed famber of primi hades. These. excasionspelbeds 10 ae ny flee, For exanpl, widemes perm re serene ons st come, fst served bass, and 15 not lene. weer hams out thelowesttenei users. But by making ress sae is posable to hove blhraeded and secluded ts, weep Se day and inthe ane general ren, Urfoturate his oe ern is notable Sn most publi beaches, a8 most Sttnem arestly equal aca. ee iar Ais Lighthouses ae foot ientbook exile of public goods, because mast economists crnnot imagine a znetho, aaa eres al dc prpvesis ha econost are ees gals then ighthousskeepers) Since lighthouse users re also harbor aan aero asters cen be made dependent on payment of lighthouse (es, The Dish lights were financed inthis ay for ae fC oases 974 Meera nacional sch eat, nt uit ie he ten of a Fa ar even topie ren. Te lary see malaise taro Annan, tether rma are cet [EquaL Acctss ve, Setzcrive Access 81 ay be distributed equally or selectively. Aisport contol towers gre everyone equal sess Uo thelr radar information, wheress ‘dar units (for use on ships or planes) are selectively avaable to fhe whe buy, them ‘AS to costs, adational persons can use Highthouses only by using the waterways they protect. And itis generally cost for an sional person to sea protected waterway. The adaitoal ship increases the ikehood of colsions (imposing cosis‘on other ters) of stfetystabdardl are to remaln uncharged, addtional ‘mvgaton aids inust be used (more lights, buoys, shipboard ada, st). This p also obvious at elepors, Anyone can use the runway ‘naskings and lights, but heavier trafic requires more navigation als (control towers, radar, et.) to maintain safety. Thus, gener- aly is cosy to serve additonal persons, and thay be elicit to exclude low-benefit user from areas protecte? by navigation aids, Ofcourse on suffienty Toney coasts the chance of ellsion ‘may beso smal thatthe adaional cost is epprosimately zero. In these cases, the fie of exclusion may be a useful methed of exirctng payment, even Ino one is actualy excluded. (The fes for Bris lights usualy applied to only the Art few trips each year 0 tha, for most users the fee fr marginal bips was Zero) B. Thinkers and Hess ‘These services (reseirch, LV, the law and cours) are expec food, but consist, basicly, of dets, Yet useful ideas are scarce, ‘nd producing them requires very tangible Inputs: thinkers, Gene erally, producing idees for more persons involves the cast of more {hinkers, othe eos of reduced ides-production for other peisons. That is the services of thinkers are just a6 congestable as other services, and there Is svslry'smong consumers to oblain these 4ervles: The exceptions are escentally evil il is cosless to ‘produce ideas foraditional persons, if these additional persons fave n problems needing thinker’ ideas or if they have the some problems ss other persone. Since it i generally costly to serve Fore persons, it may be elicit to éxcide some persons fom sets lo thinker. This f generlly posible, becnse ideas are of ‘le use unless distbuted to users: And most methods of dite- bution (eg. books) peemit selective access." Research, Equal acces (to both thinkers an ides) may occur for some types of agricultural research, Government agricultural re-bt Davetorsens wee THEORY OF MARKETS searchers study «variety of problems, covering all regions, ai farm seen all trope, The new ideas, once. produced, are freely ree ned to interested farmers. Bul equal Socess is not nectssar= pesca The snarginal cost of producing new agricultural ideas Pe eddiional persons i zero only (i they aré wot fariners or (8) they have the sme tnsolved problems af other (mers. Bat enely, eddtinal farmers will awe diferent problems. Farr seerctlems in awa differ fom thoke of mainland fermer. Tf Sr Bes to equally sole probleme forall rmers, then it miss a move research to serve farmers in'5O states than in 49, 1fSLdoes aernice more researchers, then Hawa can be served anly al the ae a daninished research for mainland formers. Either say, itis SShty woserve ational pesons, and itmay be efficient to exclude Hee (Ge access to researchers) when the marginal cost (of SSiing their probiem) exceeds the marginal beneGt (rom the Fae The marginal cos of dsirbuting ideas to additional fone, by mesne of publication, demonstraons, etc also Penerally postive. Selective access, t0 those whose marginal ben- an eet using ideas) exceeds the marginal cost of dlstefbuting, the ideas) may be efficient ‘Genomaly, access to thinkers anc thee ideas is selective, The resnan elective access is possible is simple. Ideas ae of ite value vertae they diseibuted andlor used. Selective access to the dist ation of ideas is easy (by charging fees for books or demonstin- Pano) and elective acces 10 usage often occurs (when fees art Epoeged for using patented ideas). Thus, most persons oc groups ee Scese to researchers only if they are wiling fo buy che Rtliations: ete in which the results appen. Other groups do Paria access either the researchers or Ubeir resus. The Raberoed selective access to research is not necessarily iient.* seenerd is no prior? cage for equal access, Indeed, itis the reience of copyeghts and patents that indicates that research ca classed asa puble good: although itis possible to give Saayone equal acces, tis alo possible to pve thinkers property econ suo Sarto mata” oops os theresa lng non a a and sal arin dotnet A wim pe, f Sd sade. oun Access vt Sescrive Access 63 sights in cel hott and alow them lo contol access ta their rofecrors fo agricul schools sometimes give everyone eal acess to biel esl (wiv their remals are distbuted feely by the government), At other Snes, they supply thei results elec- firey Gwhen Bhcy patent and Fcense agriceteral machines) lasly higher education as» public ESE because one of He fal pred seach. The reseach Breduced by highey edveton is indeed a valuable product, but Ei whi tay be spplied to were ele eal select. ileratenen!- Emerita oneoWe Pour Te production of ev eneringmcats (by titers, edn, actors, directors te.) and ‘ek catcuton (trough publeations, performances and brosd- ‘cats. Chen that ists df, te generally costly to produce new ‘enleriainments for additional persops. (A new mystery novel will ‘itera soe peop To een ional erions may rete E'cince fiction le, cire’s book, ete) And yeith mos ‘ieenbuton system (2h ms publiibon or performance) serving ‘siitional eons voles addond dissipation cess, Since ts {mveraly Cosy to serve addtional persons, there is bo pr ee nganot selective sess fo entertainment. Providing thatthe Coats Of excason are not too lege, i ecient te exhude ome Fig thet pray tase) exces their marginal bent (rom the resulting prodacion}. Stn, 8 is ecient to exclude some fron the distibaion of =eing entertainments, ifthe Frrginal cost (Of distibtion) exceeds heir marginal benefits tom consuing teres abel tevin? Can fe dass asa pblic good? To sere pie goed cxeston must be impel, and imt be ei ait pr Vt he nly is cxcsion possible, Dut kf generaly practiced. Aho So ee ra aay pebble at bse the (oppor) cost of eommersas. (Movies on TV ae rely “tree and many peuple ae exuded from watching ther Decse of the High cost of incessant commercials) The debate ver parctV is bostally a debate over the method of exusion (Commercsls ts. cash) rather thaw is exblence. Equal access {Grif exchision) means TV without commercials o fees or ay ther costs 16 wer. (Non-commercial government cheonels, Gounres that have them, sometimes impose te st of prope-4 Devexorwese in rHe Tony oF ManeeTs cess df, serving more prope requires rotten art er ps aga the same tases, one channel would sufi) (Cf, Minas 196) ee caro eee a et ga ate Se reore: I te} lve at the edge of the ly, then 2 stronger si se Per aerate ory migrnar mata py Coniee ed sor canon eng umm Se eet amt camicl cen ar eaten ag “eects aiemcaer ea mec inet nogeent rommenioe ab eee ore ene seamen ara ara Ce areal oat Baca Sy pores ee re ee Eo Tes) In some exes, everyone has equal access to decisional in nme i a oe Stra atau et ee age it Spectrum is feigned to and anyone may petiin loa goverament Cr ara erent cae fr a Sea OS a pl ie et Se el Babe served without edaiontept only i thy have the seu: Terthe zoning decions af Tn A if town A ond'B have exactly) the etme and use problems ther wally stint. Sener 2 ree et cay eer ore enna ps Nie, mor cven cae mamereesaay as a area ante neers Por ee cea com to epee enon arene Sarena deciionmakers do nol, make their services oust Access ys, Seuxcrie Access 85 equally availble to everyone, but limit acess to their employer (Gor business decisions) and themselves (for persenaly used te Sources). Most private contracts, from simple apartment leases to complex tbor-management preements, specify changes in prop- ety righls. These contracts ere formulated by decisionmakers fo ‘whom there iseclecive acess, ‘A skilled decisionmaker maj work on both a selective-access Basis for his businessinteresis, and on equal access basis, in his ‘Gel a6 public official I is misleading to say that education Is a ‘Public good because one ofits fina) products is skill in decision- ‘nwhing, These sls are indeed a valuable product of the educs- Sonal sysem, bul they maybe supped eter equaly or sce Wy. Abjciction, Selling disputes requires thinkers (judges) and ‘hey ideas (rulings). Tp serve more persons generally requires sore judges and tnore courtrooms. If more feces are not ac. quire, additional users will impose casts on others, ip the form of Jonge delays for tia) and/or les judicial time spent on each case. 1.5 cpstless to serve addtional persahs only if they have no lisputes oF if they have the same dispites as others, and can Agree simply use rulings from other cases. Since its costly to Sve additional users, it may be efficent fo exclude those users nefits aresol expected to exceed the costs of adjudicating Air eoes. To some Extent this is done even in the public courts. ‘Court fees are sharged for most cases. (Generally the fee des not ‘ary with the expected difcully of the ease, tnd so is not an aiflent screening device.) Private arbitzators are also available, slectively, to those pasties wing to: pay fee. 50, although adjudication isa furamental serve in any society, it does not Iollgw bat adjudjntion iss publc good. ©. Evins “Traditionally, external Benefits are treated In the same manner 44 public goods: Some goods are cesifed np having inheretly xteroa bef, Fallon of people fom these external benefite is assumed to be impossible. If, furthermore it is assumed costless -peatend the exten ene to more persons, then el ees 0 ste external Denti is both necessary and efficent. (Since « ‘eduction in an exeral cots an external benef external cote etd not he realed separately.) -sgmples of "ei xlrnliis range from eases where only a186. Peveuonnener mae Tazony oF MARKETS few persons ectve external benefits (bee services to casesinvoly- tag bey lege numbers fasbon pollution contro}. Yet, with only that Geeeptionsy iets conly to make thse external benefits Shallabie to more persons. Thats, external benefits are generally ongestble. Farthermore, exclusion is possibly either from the SePEce tact (bee services) or from the group receiving & service {fulltion contre). Hence, selective acceso (which restricts low Rhett wer) may be efficent ‘Athougi not often diseased by economist, both “pecuiary™ exhinales and “consumption” txteralies are very common. ‘Jp 'soine writers, this extends the scope of public goods theory. to over otos al of econbami reat (ce below}, but analtematve interpretation Is avalable. "pe Services. In some cases, bee services may bx. equally available: to a beckeeper (for making honey) and, without exclusion or Sharpe oe neighbcring fruit grower (lor pollinating rut tre}. ih these cases, bee services are an external benefit (othe fait ing od od.) (Alternatively, this may be considered #3 the li Ere public good: equal access within 2 two person neigh! TT aditionel frit growers move into the neighborhood, i it either ‘necessary ot ecient fo give them equal acess to the beskeeper’s 2 Bet its not costles to serve the additional orchards, Ether rote bees musi be used (for proper pollination) or, if the rumber Gf bees is not increased, the Birt orchard will bear the costs, of {inadequate pollination. (Thus, excluding low benefit users from bee services" 7 be efficient.) Second, beekeepers need not, and. senerlly €o~—%, provide bee services freely to fruit growers. Bees Ere in fact ¢ ported to orchards and rented to growers who ‘heed pollination Services. (Cheung, 1973) Ibis pointless to dassify ‘ee services as externalities, since access to this servige may be tither equal or selective, And'since it is generally costly to serve, Sdaltionel persons, there is no priori case for equal acess. ‘alltion Control. Pollution (soften referred to a an external cost, and 20 pollution may be classified as an external benefit. In some ‘ises, everyone has equal access tothe benefts. Pollution control for an urban air basin not only benefits everyone presenly living, in the area, but anyone else is Ire to visit or move into the ares, ‘Snilaly, when a ULS. river Is cleaned up, everyone has equal tecess to the benefits: both present river users and anyone else rho decides to become a siver user. But Is equal access to the enedts of pollution contsol either necessary or eicient? First, it ‘Equa Accase ws. Seuscrve Access ‘37 Jngeeay ott extend poton canto Beis aden persons, These ational persons wil generally engage n pola ig actos they wil dive cum, bum hosting Ol discharge sewage, el Ether more popalaion conga devices must be used (lo maintain ‘sir and waier standards) of polivion wil inrease (placing costs‘on previous residents or wees), Eiter way it is cealy Lo serve adekitional persons, 20 ecuding some persons from the Benefits of polition contol nye ellieent. Da s exclusion possible? Certainly there Is no way to withhold cleaner ais from ‘ne urban resident ele supplying ittaeveryone-lse, But excia- sian is possible from the gromphich reels the polation control ibmefis. Thus private rettement and resort comnts control many types of pollation fr thei? residents, such as emake, odors, nose and visual paliaon, but acess tothe community is slec- “ve. (CE. MacCallum, 1984-55, pp. 87-58) Similarly, owners of Seotish sivers control politon, bat limit acces o selected user, ‘such ax fishing clubs. (Dales; 1968). $0, pollution control is not ececaril-an external bene to which everyone must and should Ibe equalacees.=* ie *Consuniption” External: Alot si act of toamngtion tue enteral ects: SoU’ among bpp ay Bre oer persotis pleasure (froin thie af6nia) or" dlepleastire (from the ‘nok, at Jost they are inthe same room, Ska, Sith Ihoisepiants may plese ‘alhiérs, #f they can sce them. And, Smith's’ use of sriuifianig’ may’ pleise ‘or displeasé’ other persons they are aware of hi sage: The priaefc of consump- ‘tion externalities leads Sariaelsén to daim aii astounding domain forpublc goods. “Thus, consider what have given inthis ppér athe dfnition fa publ good, and oho lg Date are ote wpovasa Sfiton in my Rist and subsequent papers: ’A public good is fone tha enters fo oe person ily” What ere e Ket ‘with? «With nifecge yl of te poate good cas, and wit all Ihe reo th wale cel dan veo eng some consti external (96, p 08; emphasis added). ‘Asis traditional, this selects an attempt to assify goods as being faite en eee aly and selective access, Does everyone unsoidaly have accesso the feral elects of Srilth’s acts of consumption? If Smith smokes ‘his pipe fn publi, then everyone has equal acces to the esters(a2 Devexarntters ay 0 THEORY oF Mankers effects, b they good or bad Bu. if Sith smokes at hogs RE recite’ no consumption exteraltes (fhe i lone) oe they are Tinted to Ihowe persone who have selctioe aces 19 his Wee Eimlry if Shs houseplants are outdoors onthe tee aide of Hs house, Dore ae consumption exteralies to which everyone fas enlaces they ae hi stud thet my affect ne one Sat himcelf Sith’ lugter al func movie may give other ensures fe watching i theatre, bul wl hve no inch Smother i hei watching the movie on Lelevsion at home stone. Finally, Satire consumption of masjuana may affect other i. they Know about i Ita is often the tase, Sith Keeps ‘Sreumption soee. there sre ho “consumption eternal” On Sthers. a What are we left with? By virtue of involving some “conatmps! ty choice must be made jth regard to sos! tery at of consumption is there te eal or sect acest the fect ofthat eonsumplion a2 Ar in othercase, there isn pri answer. Eficent choice depends on the cst of granting ‘ea te more persons the coat of excuslon the wale of diverse ecuniry External, Smith hanges bs preferences: desing, say, 10 boy snore wheat fot Joes, this wit affect the pie. ‘wheat ia the markt in wich they ade Tv, Sal's prefers “ange stone may have an ee oo small to measure. But if are Sre'cany Smiths Buying fom many Joneses, thie combined, preference changes wil messucbly roe the market pice of ‘eat, Ths price change doesn't jst afc the transactions Beg Treen these buyers (Sith) and these sells ‘Oonores). slag Sects ll the ommihe and non Joneses ‘who buy nds ‘rhea. Sine the eterna fet soley on pric, this scaled & pecuniary ov pric external. “AT the people who buy and sell te see mare as the Simths anid the Joneses have equal acess to this pecuniary exter= sally they choose to continue buying and eligi be the higher pice, which is sen a3 pecniny extra benef by thar Sellers nd.to a pecuniary external cost by athe buyers ‘Thor, pecuniary exteraes appear sito puble goods: very? he, o teat oeryone in the affected market a qual accede {othe pecuninry extras. Dut ine etch inthe desepion tthe rave “in the feces anahet Tre, there av wort aris in some pt ion external Equal AccESS vs. Sruzcrive Access 69 sumersyols pecuniary extenaliles to whic ceayone dese sitet ene ear an ep ea ee Sop pl cer Seca fw ea pea arty 2 ole en ing acres pam gee ae irae cosa f : rally, t may be ete wince ees sot beet se tn hs ee ne Peas sunny xls nyse an nal ene Cetera eet ih a ne be ee ihe pen gully net to whet cae nh re any transactions ( ‘ics of buyers and sellers) is ineiie on, ks elident to allow all buyers and ates os eet een with us since Adam Smith, and does: tn the theory ‘of public goods for its justification? utes aotreed te ey ry set. Removing cite on ly eteoe quay ant mara wil hve Ptive “al eiseraies sie ou ‘ovens rsanmend th dso oder rel eames pos whe pociiany extemal do not Henceleis generally misleading to describe good’ or services as inher cently public goods, or quasi public goods, or externalities. Case Studies, covering a wide range of traditional examples, show that methods of exclusion exist and, indeed, are frequently used. In ase after case consumers jointly use congesnble facilities, so that ‘serving more persone requires elther more, costly facies, imposes 3 congestion cast on others. Minor exceptions to thie conclusion may exist, but mast be evelustad carefully. For many Yyeuts, exclusion from the services of lighthouses and bees was” {sserted to be impossible, not becanse it actually was, but because conomists Inked the imagination or empirical studies to show otherwise. For normative analysis, the problem is not dassifeation (as public, quasi-public or otherwise) but the choice between equal or Selective access. This choice may involve differences in method of istribution, amount produced and its distbution, a$ well as ‘quality diversity (euch a8 fast and slow highway lanes, which Fequize selective access to prevent speed equalization). Equal ac- cess may be more efficient for some services (c., defense from ‘External attack), bat this is not an inherent characteristic of the ‘services. Changes in technology or preferences could make selec- live access shove efficient in the future. “The questions remain for postive analysis: Why is equal access chosen in some situations, and ot others? Why are'some roads, free; other toll? Why is erime deterrence increased via (equal access) police patrol in somecases, and via (selective access) alarm Systems in others? Is there an invstble hand which guides public choices to the effident distribution system? Or does equal access simply benefit the majority at the expense of the minority? (Spann, 1978) Many people have egaltarian preferences. The} would like to see income equally distributed, andlor system of equal acess t {erlain goods and services. Economists who share these egalitarian ‘ales have a prablem, since most economic theory is based on an individualistic value system. There is usually aconfict between the ‘ero? Peroltes, Uncut, ral deco an rect te oppo GGmidectione. tener re tn ignore. ying pon pratense Freunary verse fen gv cele snton ser who ayy farm lens 1 publ ples whch Ret compan. (Calin, 195) sw Accusrvs. Sager Access “$1 individvatiom of economic theory and the egalitarian vahies of same economists. There have heen many attempts to use economic theory to suj>port equalization of income, but these have nat been ‘particularly successful, (Blum and Kalven, 1953) Perhaps one vea- ‘son why public goods theory has been so popular is that it appeared to give the support of economic theory to an egalitarian ‘gstem of distribution, for a number of important services, As show by the case studies in this paper, economic theory does not give « priori support to equal access for these services. This, of source 5 unikely-to-dinoa fe preferences Ihe holds, nor is it intended to. Egalitarian eentiments are 2 basic ‘economic preference, and economists who hold these preferences ‘will no doubt search for ther methods to justify equality. References 7 ‘Blum, Waller J. and Kalven, Hany, Jf. The Unesy Case for Progressive Tizaton, Chicago: Univ. of Cheng, 1953. Bachanan James i. “Notes for an EcSnomic Theory of Socialism." Public Gai, 8 (Spring, 1970), 9-43: (Cheung, SteyenN. 5. “The Fable ofthe Bees: An Econcnc Investigation." ‘ur Law Exo, 16 (Np, 1973), 1-3. ‘Coase, RH. “Th Lighthouse fa Economics." Jur Lt Et, 17 (Oc. 197), 101-28. DalesI.H. Balaton, Pet and Pris. Toronto: Uni. Toronto, 1968. Golo, Kenneth D. “Pele Estates lnluenee Publi Flic.” Prblic hoc, 23 all 1879) 1-10. “Bs std Recreation.” Land Econ. 68 (May, 1972), 114-24. Fea, John G. and Shoup, Cad S. "Public Goods, Paivate Goods, and “Ambiguous Goods.” Feat ur; 79 (Sep. 196), 867-7. ‘MacCallum, Spencer. “The Social Nature of Ownership.” Modern Age, 9 ‘Winter, 1964-65), 49-61; Mansfekd, Eden. Mrcanais, (2nd Editon). New York Norton, 1975. Masgrove, Richard A. and Musgrave, Peggy 8. Pb Financ in Theory ond ‘Prt, (2nd alton). NewYork McGrail, 1975, Samactaon, Poul A. "The Pure Theory of Public Expenditure.” ew. Exo. Sut (NG 1958), 347-99, =. "Diagrammatic Exposition of Theory of Puiie Expenditure ‘es ran. Sa. 37 (Now. 1955), 350-56. “Puke Theory af Public Expenditure and Taaon, in Margolis, ‘nd Galton, H. (eds). Ble Enon: An Anas of Pal Pratction ‘Cision al tr Relations othe Prive Secor: rigs of @ ‘onferec ely the intersonalEcanancs scat, London: Macint- Tan, 169.