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Microeconomic Building Blocks

Brett M. Frischmann

in Infrastructure: The Social Value of Shared Resources

This chapter provides a detailed discussion of microeconomic concepts that serve as building blocks for the demand-side analysis developed in Part II and applied in Parts III and IV. The concepts are ... More

This chapter provides a detailed discussion of microeconomic concepts that serve as building blocks for the demand-side analysis developed in Part II and applied in Parts III and IV. The concepts are important to understanding the value of infrastructure and evaluating and improving resource management. Specifically, the following microeconomic concepts are discussed: public and private goods: (non)rivalry and (non)excludability; consumption goods and capital goods; externalities: incomplete and missing markets; and social goods: nonmarket goods, merit goods, social capital, and irreducibly social goods. The chapter concludes with a brief discussion of speech. While not a building block, the speech example usefully illustrates how some of the microeconomic concepts relate to one another.Less

The Intrinsic Value of the Environment

Wilfred Beckerman and Joanna Pasek

in Justice, Posterity, and the Environment

Generations are not homogeneous entities and are composed of individuals and nations that have conflicting interests in the way in which resources are allocated among competing uses. This chapter ... More

Generations are not homogeneous entities and are composed of individuals and nations that have conflicting interests in the way in which resources are allocated among competing uses. This chapter discusses whether ‘the environment’, or ‘nature’, should enjoy special status in any allocation; whether the economist's approach is too anthropocentric; the concept of ‘intrinsic’ values; and the application of these concepts to environmental valuation. It is argued that while many environmental assets are ‘public goods’, so that the free market is unlikely to supply the socially optimal amount, the same applies to many other things, such as public health or education services or the arts, not to mention the fact that most people in the world are, anyway, in dire need of a simple increase in their ability to buy simple basic private goods. This means that the allocation of resources to environmental objectives ought to take into account some form of cost‐benefit analysis.Less

Defining Global Public Goods

Inge Kaul, Isabelle Grunberg, and Marc A. Stern

in Global Public Goods: International Cooperation in the 21st Century

People need both private and public goods for their well‐being. This chapter focuses on public goods, introducing the generic concept of public goods first, refining this generic definition, and ... More

People need both private and public goods for their well‐being. This chapter focuses on public goods, introducing the generic concept of public goods first, refining this generic definition, and identifying the distinguishing characteristics of global public goods. The main properties and distinguishing features of international public goods, including regional and global public goods can be grouped into two sets. The first is that their benefits have strong qualities of publicness – i.e., they are marked by nonrivalry in consumption and nonexcludability. These features place them in the general category of public goods. The second criterion is that their benefits are quasi universal in terms of countries (covering more than one group of countries), people (accruing to several, preferably all population groups), and generations (extending to both current and future generations, or at least meeting the needs of current generations without foreclosing development options for future generations). This property makes humanity as a whole the publicum, or beneficiary of global public goods.Less

High-Skilled Labour Migration

Alexander Betts and Lucie Cerna

in Global Migration Governance

This chapter examines the global governance of high-skilled labour migration. Firstly, it argues that global governance in this area is predominantly characterized by unilateralism and bilateralism, ... More

This chapter examines the global governance of high-skilled labour migration. Firstly, it argues that global governance in this area is predominantly characterized by unilateralism and bilateralism, and that the institutional framework that exists at the multilateral level (in the form of the WTO's GATS Mode 4 and the Global Forum on Migration and Development) is a ‘facilitative’ form of multilateralism. Secondly, it explains the predominance of this level of governance by drawing upon global public goods theory to argue that, unlike many other areas of migration, the costs and benefits of high-skilled labour migration are largely confined to the sending state, the receiving state, and the migrant. Rather than being conceived as a global public good, the governance of high-skilled migration is likely to be a private good, implying that one would expect unilateralism and bilateralism rather than multilateralism. Thirdly, it argues that, on a normative level, an efficiency case cannot be used to support binding multilateralism but might support the development of facilitative multilateralism to improve bilateral partnerships.Less

Paul Samuelson and Global Public Goods: A commemorative essay for Paul Samuelson

William D. Nordhaus

in Samuelsonian Economics and the Twenty-First Century

The distinction between public and private goods follows from concerns about the concepts of market efficiency. This chapter fits in with the appraisal of polar cases of fact from an epistemological ... More

The distinction between public and private goods follows from concerns about the concepts of market efficiency. This chapter fits in with the appraisal of polar cases of fact from an epistemological appraisal point of view. It argues that a public good for which the cost of extending the service to an additional person is zero, is a polar case of an externality. Externality, non-rivalry, and non-excludability are budding research programs which will be of great concern for the 21st century because private markets generally do not guarantee efficient outcomes. The ‘stock externalities’ concern for public goods, particularly with regards to nuclear energy and greenhouse gases, has a firm hold in 21st century policy issues, as well as implications for the course for the future course of international laws.Less

Explaining Wrongdoing

Mike W. Martin

in Meaningful Work: Rethinking Professional Ethics

Just as personal commitments shape the character of professionals, failures of personal commitment and character enter into understanding their wrongdoing. We can distinguish two types of ... More

Just as personal commitments shape the character of professionals, failures of personal commitment and character enter into understanding their wrongdoing. We can distinguish two types of explanations of wrongdoing. Character explanations appeal to features of persons, either general flaws or specific failings manifested in immoral acts. Social explanations, in contrast, appeal to outside structures and pressures that contribute to misconduct, including influences within professions, corporations, and the wider society. This chapter seeks to renew an appreciation of character explanations, distinguishes some of their main varieties, and shows how they complement rather than compete with social explanations. The opening section clarifies how character explanations carry explanatory meaning and why their reference to values does not render them suspect. The concluding section integrates character and social explanations within a virtue-ethics framework for understanding mixed motives in response to multiple social influences, drawing upon and recasting Alasdair MacIntyre's distinctions between internal and external goods and between public and private goods.Less

Public provision and optimal taxation

Matti Tuomala

in Optimal Redistributive Taxation

As in the case of commodity taxation, publicly provided private goods and pure public goods can be seen as additional instruments for redistribution policy when these goods are financed by non-linear ... More

As in the case of commodity taxation, publicly provided private goods and pure public goods can be seen as additional instruments for redistribution policy when these goods are financed by non-linear income taxation. Much of the activities of the modern welfare state are related to provision of private goods (education, health care, childcare and care of the elderly, etc.). In some developed countries the share of GDP would be as much as 15–20 per cent, whereas the share of pure public goods (general administration, defence etc.) is quite small. Redistribution is one, although not the only, reason for why these intrinsically private goods are publicly provided. Introducing additional distortion policies, which would not be used in a first-best world without asymmetric information, can be useful in a second-best situation, if they help mitigate the distortions stemming from the distortion income taxation. Chapter 13 extends the optimal labour income tax with provision of public goods and publicly provided private goods. As in Chapter 12, the key question is: can the government design a better redistribution system combining income taxation and public provision?Less

Health as a Global Public Good

Patricia Illingworth and Wendy E. Parmet

in Health of Newcomers: Immigration, Health Policy, and the Case for Global Solidarity

Contrary to the standard view that health is a private good, health should be viewed as a public good: its benefits are nonexcludable and nonrivalrous. Health should, in fact, be understood as a ... More

Contrary to the standard view that health is a private good, health should be viewed as a public good: its benefits are nonexcludable and nonrivalrous. Health should, in fact, be understood as a global public good, in light of globalization. Chapter 6 illustrates this analysis with reference to the global eradication of smallpox. Understanding health as a global public good, rather than as a private good, has implications for a nation’s moral obligations to newcomers and the health policy that its government crafts: one person’s health can adversely affect another’s health, and good health can benefit many. Given the public good dimensions of health, failure to help newcomers in need of care may not only be counterproductive because it puts the health of all at risk, it may also violate basic principles of fairness, reciprocity and justice.Less

Contributory or Disruptive: Do New Forms of Philanthropy Erode Democracy?

Aaron Horvath and Walter W. Powell

in Philanthropy in Democratic Societies: History, Institutions, Values

Does extensive private philanthropy by the super-rich undermine the democratic processes of state and civil society? In our chapter, we review the history of the relationship between philanthropy, ... More

Does extensive private philanthropy by the super-rich undermine the democratic processes of state and civil society? In our chapter, we review the history of the relationship between philanthropy, state, and civil society to explore how philanthropists came to be regarded as legitimate providers of public services. We reflect on the implications this shift may have for the practice of democracy. We contend that the modern era has seen philanthropy shift from its contributory role, in which new forms of public goods can be absorbed by the state, toward a more disruptive role, in which philanthropy-backed provisions are alternatives or competitors to those provided by the state. This shift is a product of marked changes in the institutional environment surrounding philanthropy. Among these changes is diminished faith in state bureaucracy to address public needs and expanded faith in entrepreneurialism and markets to solve problems. Thus, the current environment both legitimizes and enables a particular form of philanthropy, which we refer to as disruptive philanthropy. By shaping public conversation about social issues, setting public agendas, and providing public goods in the absence of popular deliberation, disruptive philanthropy runs the risk of eroding democracy.Less

In Search of an Ethical Frame for the Provision of Health

Ana Marta González

in To Fix or to Heal: Patient Care, Public Health, and the Limits of Biomedicine

The distinction between the healthy and the good, a major basis for ethical reflection, has become increasingly blurred in the past few decades. González seeks to reintroduce that distinction, and to ... More

The distinction between the healthy and the good, a major basis for ethical reflection, has become increasingly blurred in the past few decades. González seeks to reintroduce that distinction, and to explain the tendency to naturalize the good with reference to developments in nineteenth-century philosophy and science. She then argues that while this process of naturalization has been reinforced by the desire to avoid ethical controversies, it fails precisely in that effort. Ethical controversies always return in the end, and it is better to address them in explicitly ethical terms at the outset, before they erupt. Such controversies—such as the definition of proper care and the just distribution of health resources—can be resolved only to the extent that we develop a comprehensive notion of the human good, and its relation to the common (ethical) good.Less

Subsidies to Public Higher Education

in Public No More: A New Path to Excellence for America's Public Universities

This chapter analyzes arguments for and against subsidies to higher education in the U.S. It discusses the opinion of James Garland, president of Miami University in Ohio, that public appropriations ... More

This chapter analyzes arguments for and against subsidies to higher education in the U.S. It discusses the opinion of James Garland, president of Miami University in Ohio, that public appropriations are not contingent on institutional performance, benefit the wealthy at the expense of the poor, and shield institutions from the efficiency-enhancing forces of competition. The analysis reveals that higher education is primarily a private good, with most of its returns flowing to the recipients. This chapter argues that from this perspective, it cannot be argued that higher education should receive a significant subsidy.Less

Relaxing the Second-Best Constraints

Robin Boadway

in From Optimal Tax Theory to Tax Policy: Retrospective and Prospective Views

This chapter begins with a discussion of the use of policy instruments in addition to the nonlinear income tax that would not be used in a first-best world of lump-sum taxes and transfers. These ... More

This chapter begins with a discussion of the use of policy instruments in addition to the nonlinear income tax that would not be used in a first-best world of lump-sum taxes and transfers. These include not only the strategic use of commodity taxes and public goods, but also the public provision of private goods and various forms of quantity or price controls. The chapter then considers ways of enhancing the information available to government, some of which the government now makes extensive use of, others it does not.Less

Universities and Markets: (II) Theory and Critical Debate

David Palfreyman and Ted Tapper

in Reshaping the University: The Rise of the Regulated Market in Higher Education

While accepting that the reason for charging students at English universities full-cost fees was economic this chapter also explores the neoliberal thinking behind the policy. Higher education is a ... More

While accepting that the reason for charging students at English universities full-cost fees was economic this chapter also explores the neoliberal thinking behind the policy. Higher education is a private and a public good and thus it is only fair that its recipients should bear some of the costs of its provision, and universities will take their teaching responsibilities more seriously if they are in a market context where students act like rational consumers. While exploring the issues, the chapter draws upon comparative national examples of students paying fees. Despite a widespread global move in this direction, there is no evidence to demonstrate what the ideal balance for higher education should be. This is a matter resolved by political struggle and economic necessity. While conceding that mass higher education systems are likely to be privately-funded, the chapter highlights the possibility of market failures and the need for state regulation.Less

Rules from Voluntary Associations as an Alternative to Coercive Ones: Governance as a Club Good

Edward Peter Stringham

in Private Governance: Creating Order in Economic and Social Life

This chapter describes how governance can be analyzed as a club good. Rather than assuming that governance must be provided by government or not at all, the economic theory of clubs describes how ... More

This chapter describes how governance can be analyzed as a club good. Rather than assuming that governance must be provided by government or not at all, the economic theory of clubs describes how many people can jointly consume many goods. Rule-enforcing clubs can be geographically based and have a comprehensive set of rules for many aspects of life (as in a boarding school or a kibbutz), or clubs such as a chess club can be formed for solving problems at small margins within one’s life. On any given day, a person might visit a gated community, an apartment complex, an office complex, a corporation, a shopper’s club, a country club, or a nightclub. As voluntary associations that must compete for members, clubs allow for choice, variation, experimentation, and solutions that vary according to the challenges at hand.Less

The Economic Classification of Spectrum and the Commons Debate

Rohit Prasad and V. Sridhar

in The Dynamics of Spectrum Management: Legacy, Technology, and Economics

This chapter places spectrum in the four-fold classification of economic goods—private goods, commons goods, toll goods, and pure public goods. It identifies spectrum as a toll good and examines ... More

This chapter places spectrum in the four-fold classification of economic goods—private goods, commons goods, toll goods, and pure public goods. It identifies spectrum as a toll good and examines whether the classification would change in the presence of technological development that allows greater sharing of spectrum. The nature of spectrum as an economic good opens up a series of questions that challenge our traditional view of market-oriented societies based upon private property. The feasibility of non-exclusive use, the associated challenges, and the immense benefits that can be gained by society upon a wise resolution of the conundrums, is addressed in this chapter.Less

A Workers' Lobby to Provide Portable Benefits

Joni Hersch

in Emerging Labor Market Institutions for the Twenty-First Century

In 1995, Sara Horowitz founded an employees' lobby called Working Today. Working Today has shifted from seeking to represent all workers via a membership organization to providing private services to ... More

In 1995, Sara Horowitz founded an employees' lobby called Working Today. Working Today has shifted from seeking to represent all workers via a membership organization to providing private services to independent workers, with the primary emphasis on provision of portable benefits. This chapter begins with an overview of how organizations form and survive. It then provides additional background on the broad-based workers' lobby suggested by the prominent sociologist Herbert Gans in 1993, followed by a discussion of two highly successful membership organizations, AARP and Common Cause. It also describes the evolution of Working Today, proposes a model of fundraising by a workers' organization in which the founder must allocate resources between the provision of public goods and the provision of private goods. The chapter examines the market for health insurance supplied by an organization such as Working Today, identifies specific policy areas involving independent workers in which a workers' lobby might fruitfully address its efforts, evaluates the accomplishments and prospects of Working Today, and assesses the prospects of a broad-based workers' lobby.Less

How Can Policy Encourage Economically Sensible Climate Adaptation?

V. Kerry Smith

in The Design and Implementation of US Climate Policy

This chapter discusses the design of incentive-based policies for climate adaptation. It begins by discussing climate adaptation policies, including models used to describe optimal pricing and ... More

This chapter discusses the design of incentive-based policies for climate adaptation. It begins by discussing climate adaptation policies, including models used to describe optimal pricing and capacity decisions with stochastic demand, and then describes the current pricing policies for the private goods that substitute for climate services. Electricity and water are both examples of substitute goods that are used to respond to regional changes in temperature and precipitation.Less

Public No More

in Public No More: A New Path to Excellence for America's Public Universities

This chapter focuses on the transition of public universities in the U.S into “public-no-more” universities. It explains that permanent public funding reduction and state and federal actions ... More

This chapter focuses on the transition of public universities in the U.S into “public-no-more” universities. It explains that permanent public funding reduction and state and federal actions requiring the replacement of taxpayer support with tuition revenue is transforming higher education into a private good. It describes the defining characteristics of a public-no-more university which include the adoption of a high-tuition-high-financial aid model, restructuring of the governance process, and encouraging entrepreneurial strategies. This chapter also considers the debate on the adoption of business-style budgeting and planning practices for public universities.Less