Tuesday, May 16, 2006


Since we are on the topic

Since we are on the topic of government failure, perhaps we should look at something similar to market externalities.

Let's call all the goods and services that are not 'public goods' and still provided by the state: governmental internalities. Examples would include road service, libraries, health services, postal services, and a number of other services. (1)

Some definitions:

Public goods are nonexcludable (in benefits) and nonrival in consumption.

Externalities occur when one person's actions affect another person's well-being and the relevant costs and benefits are not reflected in market prices. There can be both positive and negative externalities.

For more on the subject of public goods and externalities, read Tyler Cowen's essay.

(1)There are of course some externalities that can be associated with these goods and services, but externalities are a weak argument for monopoly power by governments (in my opinion)

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