Abstract
We explain the concept of public goods as understood in economics. That is, non-rivalrous and non-excludable goods as opposed to rivalrous and excludable private goods. We also explain the concept of externality as the effect on society as a whole. We show how markets cannot effectively provide neither public goods nor goods that involve externalities. We argue that cities, as a tangle of public goods and externalities, need effective governance and thus regulation.
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Notes
- 1.
In fact, the legal system as a whole is a public good. Without a legal system the enforcement of property rights would be impossible. The mere existence of markets therefore relies on a public good that must be provided by the government. This fact is as essential as overlooked.
- 2.
For instance, an unregulated, perfectly competitive fishing industry would result in depletion of the fish stocks, see Nicholson and Snyder (2015).
- 3.
Note that something can be a good for some and a bad for others. Fireworks are a good example.
- 4.
Euclidian zoning, Fluck (1986), will be explained in detail in Chap. 8.
- 5.
Some economic thinking suggests that the cost of market failure due to public goods, externalities etc. is actually lower than the cost of government failure. That is the cost imposed on society in terms of taxes, lobbying, corruption and so on. Notwithstanding government ought to be less than perfect, we deeply disagree with this line of thought.
References
Fluck, T. A. (1986). Euclid v. Ambler: A retrospective. Journal of the American Planning Association, 52(3), 326–337.
Nicholson, W., & Snyder, C. M. (2015). Intermediate microeconomics and its application, twelfth edition. Cengage.
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Guillen, P., Komac, U. (2020). Public Goods, Externalities and the City. In: City Form, Economics and Culture. SpringerBriefs in Architectural Design and Technology. Springer, Singapore. https://doi.org/10.1007/978-981-15-5741-5_4
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DOI: https://doi.org/10.1007/978-981-15-5741-5_4
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