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The Voluntary Provision of Public Goods? The Turnpike Companies of Early America

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  • Klein, Daniel

Abstract

The heroic role of the agent called "government" in the simple public-goods model is clear enough, but the relevance of the model is still in dispute. A long history of doubters have challenged the premises that the government has the needed information, acts efficiently, and acts in the public interest. Also, doubters have contended that the free-rider problem of many public goods is not as ineluctable as others often seem to suggest. Historical studies have shown the potency of voluntary association in such fields as lighthouse provision [Coase 1974], education [Ellig & High 1988], bee pollination [Cheung, 1973], law and order [Anderson & Hill, 1979; Benson, forthcoming], neighborhood infrastructure [Beito, forthcoming], agricultural research [Majewski, 1989], among others [see Cowen, 1988; Wooldridgge, 1970]. To help weigh the relevance of the simple public-goods model I discuss the American experience of private turnpike roads. Extreme publicness marked the turnpikes, both in jointness of consumption and in nonexcludability. The excludability problem was partly the result of legal restrictions on toll collection. These restrictions caused in part turnpike unprofitability, which was discovered quickly. The turnpikes afforded enormous indirect and external benefits, however, to the nearby farms, landholdings, and businesses. Since unprofitability was usually foreseen, stock subscription -- necessary to construct the road -- was essentially a means of paying for road benefits. There were two excludability problems: people could use the road without paying a toll, and people could indirectly benefit from the road without buying stock. Though related, the latter is the crux of the public-goods problem at hand. The turnpike companies got started in the 1790s and were in sharp decline in the 1830s, though many turnpikes were operating at the turn of our century. I treat turnpikes in New England, New York, Pennsylvania, New Jersey, and Maryland (the last four I call the "Middle Atlantic states"). Except in Pennsylvania, the turnpikes were almost entirely financed by private subscription to stock, while those in most other states were mixed enterprises. Various facets of toll-road history are being explored by a co-researcher and myself, but here the discussion is confined to the public-goods aspect of the turnpikes.

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Bibliographic Info

Paper provided by University of California Transportation Center in its series University of California Transportation Center, Working Papers with number qt0js4r8h9.

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Date of creation: 01 Mar 1990
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Handle: RePEc:cdl:uctcwp:qt0js4r8h9

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Keywords: Social and Behavioral Sciences;

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  1. Dawes, Robyn M & Thaler, Richard H, 1988. "Anomalies: Cooperation," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 187-97, Summer.
  2. Coase, R H, 1974. "The Lighthouse in Economics," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 357-76, October.
  3. Brubaker, Earl R, 1975. "Free Ride, Free Revelation, or Golden Rule?," Journal of Law and Economics, University of Chicago Press, vol. 18(1), pages 147-61, April.
  4. Sugden, Robert, 1984. "Reciprocity: The Supply of Public Goods through Voluntary Contributions," Economic Journal, Royal Economic Society, vol. 94(376), pages 772-87, December.
  5. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  6. Bohm, Peter, 1972. "Estimating demand for public goods: An experiment," European Economic Review, Elsevier, vol. 3(2), pages 111-130.
  7. Marwell, Gerald & Ames, Ruth E., 1981. "Economists free ride, does anyone else? : Experiments on the provision of public goods, IV," Journal of Public Economics, Elsevier, vol. 15(3), pages 295-310, June.
  8. Peter Bohm, 1972. "Estimating the demand for public goods: An experiment," Framed Field Experiments 00126, The Field Experiments Website.
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Cited by:
  1. Bryan Caplan & Edward Stringham, 2003. "Networks, Law, and the Paradox of Cooperation," The Review of Austrian Economics, Springer, vol. 16(4), pages 309-326, December.
  2. Fielding, Gordon J. & Klein, Daniel B., 1993. "How To Franchise Highways," University of California Transportation Center, Working Papers qt79z9x6fs, University of California Transportation Center.
  3. David Levinson, 2001. "Road Pricing in Practice," Working Papers 199903, University of Minnesota: Nexus Research Group.
  4. Petrie, Ragan & Jacobson, Sarah, 2013. "Favor Trading in Public Good Provision," Department of Economics Working Papers 2013-03, Department of Economics, Williams College.
  5. Klein, Daniel B. & Yin, Chi, 1994. "The Private Provision of Frontier Infrastructure: Toll Roads in California, 1850-1902," University of California Transportation Center, Working Papers qt3bc2s8vk, University of California Transportation Center.
  6. Laurent Carnis, 2013. "The provision of lighthouses services: a political economy perspective," Public Choice, Springer, vol. 157(1), pages 51-56, October.
  7. Shilony, Yuval, 2000. "Diversity and ingenuity in voluntary collective action," European Journal of Political Economy, Elsevier, vol. 16(3), pages 429-443, September.
  8. Gabriel García Morales, 2011. "Opportunistic renegotiation of infrastructure concessions as rent seeking: the effect of legal systems Gabriel Garcia Morales," REVISTA ECONOMÍA & REGIÓN, UNIVERSIDAD TECNOLÓGICA DE BOLÍVAR.
  9. Mark Koyama, 2012. "Prosecution Associations in Industrial Revolution England: Private Providers of Public Goods?," The Journal of Legal Studies, University of Chicago Press, vol. 41(1), pages 95 - 130.
  10. Dan Bogart, 2012. "Profiting from Public Works: Financial Returns to Infrastructure and Investment Strategies during Britain's Industrial Revolution," Working Papers 121304, University of California-Irvine, Department of Economics.
  11. Dan Bogart & John Majewski, 2008. "Two Roads to the Transportation Revolution: Early Corporations in the United Kingdom and the United States," NBER Chapters, in: Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, pages 177-204 National Bureau of Economic Research, Inc.
  12. Levinson, David, 1997. "Case Study: Road Pricing In Practice," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt0w06s4n2, Institute of Transportation Studies, UC Berkeley.

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