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


  • Klein, Daniel


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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  • Klein, Daniel, 1990. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America," University of California Transportation Center, Working Papers qt0js4r8h9, University of California Transportation Center.
  • Handle: RePEc:cdl:uctcwp:qt0js4r8h9

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    References listed on IDEAS

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    4. Peter Bohm, 1972. "Estimating the demand for public goods: An experiment," Framed Field Experiments 00126, The Field Experiments Website.
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    1. repec:spr:grdene:v:23:y:2014:i:5:d:10.1007_s10726-013-9342-x is not listed on IDEAS
    2. Laurent Carnis, 2013. "The provision of lighthouses services: a political economy perspective," Public Choice, Springer, vol. 157(1), pages 51-56, October.
    3. 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.
    4. Sarah Jacobson & Ragan Petrie, 2014. "Favor trading in public good provision," Experimental Economics, Springer;Economic Science Association, vol. 17(3), pages 439-460, September.
    5. Klein, D.B. & Yin, C., 1994. "The Private Provision of Frontier Infrastructure: Toll Roads in California, 1850-1902," Papers 94-95-4, California Irvine - School of Social Sciences.
    6. Dan Bogart, 2009. "Turnpike trusts and property income: new evidence on the effects of transport improvements and legislation in eighteenth-century England -super-1," Economic History Review, Economic History Society, vol. 62(1), pages 128-152, February.
    7. Bryan Caplan & Edward Stringham, 2003. "Networks, Law, and the Paradox of Cooperation," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(4), pages 309-326, December.
    8. Block Walter, 1998. "Roads, Bridges, Sunlight and Private Property: Reply to Tullock," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 8(2-3), pages 1-12, June.
    9. 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.
    10. David Levinson, 2001. "Road Pricing in Practice," Working Papers 199903, University of Minnesota: Nexus Research Group.
    11. Fielding, Gordon J. & Klein, Daniel B., 1993. "How To Franchise Highways," University of California Transportation Center, Working Papers qt79z9x6fs, University of California Transportation Center.
    12. Shilony, Yuval, 2000. "Diversity and ingenuity in voluntary collective action," European Journal of Political Economy, Elsevier, vol. 16(3), pages 429-443, September.
    13. 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.
    14. Carnis Laurent, 2014. "The Political Economy of Lighthouses: Some Further Considerations," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 20(2), pages 143-165, December.
    15. repec:bla:ajecsc:v:76:y:2017:i:5:p:1107-1132 is not listed on IDEAS
    16. Carnis Laurent, 2003. "The Case for Road Privatization: a Defense by Restitution," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 13(1), pages 1-24, March.
    17. 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.
    18. 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, March.

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