Sunday, July 26, 2009

Monday, July 13, 2009

Public privates

We usually say that it makes sense for the government to supply these things called public goods. Things that aren't excludable (if they're available to Alice and Bob, Eve can use them too) or rivalrous (if Alice's consumption of the good doesn't prevent Bob and Eve from consuming the same good). Things like clean air, crime-free streets, and national defense.

Private goods on the other hand, don't favor the government naturally. In a Communist country, the government provides them anyway. In a socialist country, the governments supplies... some of them. But which, and why?

Our government supplies post (USPS) and rail (Amtrak) services, both of which are public goods, under the understanding that those goods are natural monopolies.

Okay... so why do we care?

Well, you know what else is a private good? Health care. Is it a natural monopoly? If so, why? If not, why provide it centrally?