The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 119
realistic cases of government activity can be fruitfully analyzed
as some kind of a blend of these two extreme polar cases. 29
As we saw in the case of the socks, there is no clear dividing
line between the two categories and, furthermore, no criteria by
which the disinterested observer can objectively distinguish
between a private good, a public good, and a blend of the two.
Let us consider three examples.
First, to the extent that bread is a source of external
economies it is a public good, rather than a private one, since
these external benefits are “enjoyed by all in common.” In other
words, while the bread itself may be a private good in that if one
person has more, someone else necessarily has less, the bread
plus its inseparable neighborhood effects is a collective good,
since the externalities from the bread that benefit Mr. D do not in
any way subtract from those enjoyed by Mr. E. Mr. D’s gain from
the externalities, again in Harito’s words, “leads to no subtraction
from any other individual’s consumption of that good.”
Second, contrary to what might be assumed, an outdoor circus
need not be a collective good at all. If a fence is placed around
the festivities and a charge is levied for admission, the external
benefits will no longer seep out onto the general public. In addition,
if no one in the neighborhood likes circuses, then it is not a
good at all. However, if so many people like circuses that crowding
results, then it will not be true that one person’s enjoyment of
the spectacle will not detract from another’s. Rather, in the press
for a good view, one person’s good position will necessarily
entail a poor one, or none at all, for another. 30
29Ibid. 30On this point, see Stephen Enke, “More on the Misuse of Mathematics
in Economics: A Rejoinder,” Review of Economics and Statistics (May 1955):
131–33; Julius Margolis, “A Comment on the Pure Theory of Public Expenditure,”
Review of Economics and Statistics (November 1955): 247–49; and
Charles M. Tiebout, “A Pure Theory of Local Expenditures,” Journal of Political
Economy (October 1957): 417.