BART's new fare gates have led to a 1,000-hour decline in clean up time; 41% drop in crime; and $10 million increase in projected revenue

Tweet from NX Thompson, CEO of The Atlantic.

 

Shellfish, Typhoid, and Private Control of Disease

By Jeffrey Miron.

"According to a recent study, early 20^th c. London fishmongers provided a creative solution for the problem of foodborne typhoid transmission (the study says "Industry-led efforts to mitigate contaminated shellfish reduced typhoid deaths in London from about 1.5 to 0.1 per 10,000 people between 1900 and 1920").

The issue was that shellfish

acted as vectors for waterborne diseases … Once the connection was understood, consumers alone could have substantially reduced typhoid deaths by consuming far fewer shellfish.

Instead, a prominent fishmonger company

used the Billingsgate [fish] market to help high-quality sellers signal the quality of their products by sampling and testing harvest sites, banning sales from known contaminated areas, and requiring vendors to purchase shellfish cleaning services.

This strategy meant that

consumers who were willing to risk their own quality control could purchase shellfish for a lower price from traders who did not transit through Billingsgate, while those willing to pay a premium for third-party quality control purchased shellfish through Billingsgate.

Profit-motivated companies can create public goods." 

The lightship in economics

By Rosolino A. Candela & Vincent J. Geloso.

 

"Abstract

What role does government play in the provision of public goods? Economists have used the lighthouse as an empirical example to illustrate the extent to which the private provision of public goods is possible. This inquiry, however, has neglected the private provision of lightships. We investigate the private operation of the world’s first modern lightship, established in 1731 on the banks of the Thames estuary going in and out of London. First, we show that the Nore lightship was able to operate profitably and without government enforcement in the collection of payments for lighting services. Second, we show how private efforts to build lightships were crowded out by Trinity House, the public authority responsible for establishing and maintaining lighthouses in England and Wales. By including lightships into the broader lighthouse market, we argue that the provision of lighting services exemplifies not a market failure, but a government failure."

See also Why consider the lighthouse a public good?. Excerpts:

 

"Historically, maritime safety was provided through a plethora of different services meant to reduce the likelihood of being ship- wrecked (or beached). This included services like ballastage (filling the bottom of an empty ship with sand to give it stability) or pilotage (local experts boarding at safe points to guide foreign ships to ports). These services were purely private goods – they were excludable and rivalrous. They were also complements to light- houses. For example, a pilot’s efficiency would be superior if he had access to a lighthouse. This opens the door the possibility for firms to bundle the production of private goods and public goods in ways that can price in free-riders (Bakos and Brynjolfsson, 1999). As Cornes and Sandler (1984, 1986) pointed out, once joint produc- tion of private and public goods is possible, most of the conditions behind the conventional wisdom regarding the provision of pure public goods no longer hold. More importantly, the complementar- ity between the goods brings out a capacity to privatize the whole bundle even if one of its components is a public good. The comple- ments to the lighthouse have never, to the best of our knowledge, been considered in the economics literature."

"Candela and Geloso (2018a) illustrate this point with respect to lightships, also known as floating lighthouses. In 1731, two entrepreneurs, David Avery and Robert Hamblin, moored the world’s first modern lightship in the Thames River. The particular importance of the Nore lightship was that it was introduced pre- cisely at a time when traffic at the Port of London was increasing rapidly. During the 18th century merchant traffic entering the Port of London stood increased nearly fourfold, from 157,035 tons in 1702 to 620, 845 tons by 1794 (House of Commons, 1796, p. V). The production of the lightship was strategically placed at the shallow mouth of the Nore bank, at the confluence of the Thames and Med- way rivers, where lighthouses could not be constructed and the risk of shipwreck was highest. The willingness of entrepreneurs, such Avery and Hamblin, to supply a lightship, rather than construct- ing another navigational aid, such as buoy or beacon, emerged only when the profitability of accommodating additional commercial ships rose. Therefore, the consumption of lighting services grew more rivalrous as commerce increased, as well the cost of ship- wreck. It was the rivalrousness of lighting services that incentivized Avery and Hamblin to advertise their product, price discriminate based on tonnage, and therefore craft ingenious way to exclude non-payers. This included the use of subscription payments by which they were able to overcome free-riding. The fact that the lighthouse (and lightship) has been treated as a public good, and therefore as non-rivalrous, has directed economists’ attention away from the various ways in which lighting services were provided, and how excludability was an endogenous feature of such rival- rousness"

Disney’s Private Provision of Public Goods

By David Boaz.

"Quite aside from the politics of DeSantis vs. Disney, I learned some interesting things in this article about Disney’s “special taxing district” and about the private provision of public goods on Disney’s vast Florida property. First off, the Reedy Creek Improvement District (RCID) is not a tax break for Disney:

Disney pays property taxes to Orange and Osceola County at the same millage rate as all other county taxpayers (totaling nearly $300 million from 2015 to 2020). The Florida Constitution does not allow taxpayers within a county to be treated differently unless those taxpayers consent to the creation of a special taxing district to levy additional taxes on top of the regular county property taxes.

And that’s exactly what RCID has been doing for over 50 years. Disney pays additional taxes to RCID (at the highest millage rate in the state) to cover expenditures for government‐​type functions like building permitting, fire and emergency medical services, a power plant, water and waste treatment, trash and recycling, and construction and maintenance of roadways and waterways.

And what kind of service quality does this rapacious private company provide over its 25,000 acres (39 square miles)?

The annual budget for fiscal year 2022 is more than $160 million, and RCID uses those funds to maintain a higher standard for these various functions than any local, state, or federal government entity would be able to accomplish.

As one example, the House of Mouse has immaculately maintained roadways throughout their property; Orlando locals joke about trying to get Disney to seize control over the seemingly unending construction on I‑4. The “EPCOT Codes,” Disney’s proprietary building codes, are extremely detailed and state‐​of‐​the‐​art, offering the highest level of hurricane protection and other safety measures. Three contractors who have done work at Disney whom I’ve interviewed for research on RCID (independently; they don’t know each other) called the EPCOT Codes “a pain in the a**,” but all acknowledged these demanding standards achieved a top level of safety, aesthetics, and improved guest experiences.

And the environmental issues cannot be ignored. Disney’s property stretches across a wide swath of Central Florida and is mostly green space, overlapping with the Florida Wildlife Corridor, a critically important habitat. RCID devotes millions of dollars every year to water quality alone, from the fertilizers they select to the higher water purification levels they maintain, benefitting other downstream waterways in the southern part of the state.

It’s often assumed that only government can supply such public goods, though there are many historical examples of private provision, many of them collected in this volume edited by Tyler Cowen. Now we are reminded of another example, which economist David Levy examined in 1975.

More on the topic from Fred Foldvary and Roy Cordato and Don Boudreaux. I wrote about proprietary communities and public goods in the Washington Post and in The Libertarian Mind (pp. 343–45)."