The 'Non-Public' Provision of 'Public' Goods: An Exploratory Analysis

Abstract:     
The 'public' or 'collective' nature of some goods and services has often legitimated the intervention of the 'visible hand' of the state. The new institutional economics initiated by Coase raises objections against this rationale. First, several heterodox authors question the proper nature of goods and show that the 'public or private nature' is socially constructed at several stages, i.e. financing, production and access. Consequently, economics implications resulting from this distinction are seriously contested. Second, Coase and his followers resituate the debate on economic efficiency grounds and challenge the public goods rationale for government production. New institutional economics proposes to identify, in a comparative way, the real institutional arrangements likely to minimize the whole production and transaction costs. Coasean economics does not mean the absence of state intervention, but rather redefines the modalities of this intervention, to enable the achievement of benefits proper to private arrangements. Government intervention does not necessarily imply that public authorities will deal with all the aspects that can be distinguished in the provision of 'public' goods. Transaction costs economics show the diversity of arrangements on a continuum ranging from the 'all-state' to the 'all-market' approach. We study three institutional arrangements likely to lead to non-public provision of public goods: the association of private benefits, collective organization and contractualisation. We analyze the modalities of public intervention and stress the degree of mixing in institutional arrangements. Some examples are presented, mainly in the agricultural sector, where the 'collective' nature of some environmental productions has considerably justified the 'heavy' intervention of the state.

Keywords: Non public provision, Collective goods, New institutional economics

JEL Classification: H41, Q58

Accepted Paper Series