----------------- HES POSTING -----------------
In response to Pat Gunning:
> > So, let us confront then the final question, the existence
> > of pure collective consumption (or "public") goods.
> > Samuelson poses the standard example of national defense.
> > Why do you reject this?
>
>Thanks, J. Barkley, for the invitation. I dug up a part of a chapter in a
>provisional text on Market Failure that I wrote a couple of years ago and
>posted it to my web site. The address is below and a more complete answer
is
>there. But to give you a brief answer, it is obvious to anyone who thinks
>about
>it, from the modern perspective, that exclusion of beneficiaries is
possible.
It is possible, but it is inefficient to do so.
>The provider only needs to have the power to expel someone from the
protected
>area. And if a provider of national defense does not have this power, she
>could
>hardly provide national defense. It is almost as obvious that the long run
>marginal cost of supplying people in most practical situations is about
the
>same as the long run average cost.
On the contrary, it is not obvious. It is false. The long-run marginal cost
of adding another person to the protected group is zero.
>The important question is why Samuelson (and
>his supporters) did not think of these facts.
Because they are wrong--the second one anyway. And Samuelson thought, and I
continue to think, that the efficency problem stems fundamentally from
non-rivalry--so that's the answer to the first "oversight".
>As for Kevin Quinn's post, I did not claim to be a Coasean. As for his
further
>argument that Coase's "revolution" is only vocabulary, he will have to do
more
>than simply make the claim. Otherwise, the discussion will turn
ideological
>which, contrary to his suggestion, so far it is not.
I would say that it turned ideological when you characterized Samuelson's
work on public goods as "in the dark ages" and when you effectively
dismissed with a sneer the possibility that there is anything to be learned
on the subject from "theoretical welfare economics." That's what set me
off, at any rate. But I will try and calm down!
>
>
>To challenge the theoretical orthodoxy, which Coase did, does not turn one
>into
>a ideologue. If we agreed that it does, we would have no grounds to claim
that
>economics is a system of thought capable of being improved.
You are the one claiming that no one knew anything worthwhile about
public goods, we were all in the Dark Ages, making no progress, until the
great Coase appeared and set things straight.
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