positive externalities Archives — LIRNEasia

The distinction between public goods and activities with significant positive externalities was developed in conversation the our Advisory Council Member Randy Spence. I used it develop a schema that people could use as they think through what government should and should not do. I illustrated the positive externalities discussion using the postal service, because it had explicitly come up in discussions within a statist political party. People are used to government-operated postal monopolies. In country after country, they are losing money and failing to provide services of adequate quality.

Public goods and positive externalities

Posted on February 8, 2011  /  0 Comments

Our research on the rubber growing industry has taken us into a terrain where there are many government services, not optimally provided, and suggestion about more government services that could be provided to further one or another objective. In this context, the article just published in Ground Views has relevance, as shown by the opening para below: There is little value in simply reiterating complaints about government service delivery since there is an over-supply of dissatisfaction. Instead I seek to provide a set of conceptual tools that can be useful in understanding what government services are essential and why government over-extends itself in service delivery, doing too many things badly. Hopefully, this will help us structure our thinking and expectations relating to government services. The incentives of politicians and bureaucrats are to always do more things, irrespective of need and efficiency.