The Lighthouse in Economics
Encyclopedia
"The Lighthouse in Economics" is an academic paper
written by British
economist
Ronald H. Coase.
This paper challenges the traditional view that lighthouse
s are examples of public good
s by showing that privately owned lighthouses existed in England
. Coase aligned lighthouses more with club good
s because they are excludable
by way of charging port fees. Stopping short of a full analysis, the paper is generally viewed as an excellent insight into the dimensions of public goods and an invitation by Coase for a full economic analysis of the lighthouse.
Recently, the paper has been criticized by Van Zandt (1993) and Bertrand (2006) for not fully appreciating the characteristic of non-excludability of public goods. Historical records showed that those lighthouses which ran on voluntary payment did not survive long and eventually had to be granted the right to collect a light due by the government. Although other lighthouses were run privately, the right to collect a non-negotiable light due was supported by a patent from the crown. In other words, they were not privately provided via the free market as understood by the earlier writers.
Eventually, all these rights were withdrawn or bought up by the authorities because the total light dues that had to be paid by ships were too high as a result of rent-seeking activities of these so-called private providers of lighthouses. Barnett and Block (2007) qualify these critiques by showing that private lighthouses were indeed historically operational.
Academic publishing
Academic publishing describes the subfield of publishing which distributes academic research and scholarship. Most academic work is published in journal article, book or thesis form. The part of academic written output that is not formally published but merely printed up or posted is often called...
written by British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
Ronald H. Coase.
This paper challenges the traditional view that lighthouse
Lighthouse
A lighthouse is a tower, building, or other type of structure designed to emit light from a system of lamps and lenses or, in older times, from a fire, and used as an aid to navigation for maritime pilots at sea or on inland waterways....
s are examples of public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s by showing that privately owned lighthouses existed in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. Coase aligned lighthouses more with club good
Club good
Club goods are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs...
s because they are excludable
Non-excludable good
In economics, a good or service is said to be excludable when it is possible to prevent people who have not paid for it from having access to it, and non-excludable when it is not possible to do so.- Examples :...
by way of charging port fees. Stopping short of a full analysis, the paper is generally viewed as an excellent insight into the dimensions of public goods and an invitation by Coase for a full economic analysis of the lighthouse.
Recently, the paper has been criticized by Van Zandt (1993) and Bertrand (2006) for not fully appreciating the characteristic of non-excludability of public goods. Historical records showed that those lighthouses which ran on voluntary payment did not survive long and eventually had to be granted the right to collect a light due by the government. Although other lighthouses were run privately, the right to collect a non-negotiable light due was supported by a patent from the crown. In other words, they were not privately provided via the free market as understood by the earlier writers.
Eventually, all these rights were withdrawn or bought up by the authorities because the total light dues that had to be paid by ships were too high as a result of rent-seeking activities of these so-called private providers of lighthouses. Barnett and Block (2007) qualify these critiques by showing that private lighthouses were indeed historically operational.
Further reading
- Barnett, William and http://pfr.sagepub.com/content/35/6/710.abstract