The Privatization of Roads and Highways - Ludwig von Mises Institute

98 The Privatization of Roads and Highways
private goods such as bread, which adds to the well-being of only
those who purchase and consume it.
The distinction is often made in terms of excludability: in the
case of private goods, the consumer is able to exclude all others
from the benefits; in the case of public goods, he is not, and so
some of the benefits “spill over” onto third parties. A typical textbook
makes the point in the following way:
For a good, service, or factor to be “exclusive,” everyone but the
buyer of the good must be excluded from the satisfaction it provides.
A pair of sox, for example, is a good which is consistent
with the exclusion principle. When you buy the sox, it is you
alone who gets the satisfaction from wearing them—no one
else. On the other hand, a shot for diphtheria is a “commodity”
which is not subject to the exclusion principle. While the person
inoculated surely get(s) benefits from having the shot, the benefit
is not exclusively his. Having become immune to the disease,
he can’t communicate it to other people. They cannot be
excluded from the benefit of the shot even though they do not
pay for it and even though the person receiving the shot cannot
charge them for it. 2
Even at this introductory level an objection must be made.
There are any number of external economies, neighborhood
effects, spillovers, benefits to third parties, which flow from the
considered by most economists as virtually the same (i.e., as merely opposite
sides of the same coin), in our view positive and negative externalities
are conceptually different and in need of separate treatment. See Murray N.
Rothbard, “Law, Property Rights, and Air Pollution,” Cato Journal 2, no. 1
(Spring, 1982): 55–99. Reprinted in Economics and the Environment: A Reconciliation,
Walter Block, ed. (Vancouver, B.C.: Fraser Institute, 1990).
2Robert Haveman, The Economics of the Public Sector (New York: John
Wiley and Sons, 1970), p. 25. Robert Bish and Robert Warren, “Scale and
Monopoly Problems in Urban Government Services,” Urban Affairs Quarterly
8, no. 1 (September 1972): 97–122, define public goods in terms of
excludability: “Public or collective goods in economic terminology are
‘non-packageable’; that is, in principle, no one can be excluded from consuming
them.”