I find this insight a little weaker than the previous post on markets as public goods – I’ll blame it on cross-country travel. The entire theory of public goods always felt to me very much a castle in the air. Why is this? Well, the public goods problem is one that articulates how difficult it is for public goods to be produced in the first place. But this is surreptitious.
Why?
I’d feel better if the theory was a speculation about why some goods have not yet been produced. But the theory always felt awkward to me because it assumes the public good has already been produced. Now look, I’m not as poor an economist as that comment makes me sound. The theory of public goods is one that explores why the good is underprovided rather than not provided at all. And if potential producers can capture some of the gains from a trade then some of the good is likely to be produced. But I think the criticism of the theory is still apt. Something enabled entrepreneurs to captures some of the value of the public good in the first place. It seems unreasonable as a starting point for an analysis not to think there are strong competitive reasons for entrepreneurs to continue to do so.
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