Public versus private provision of collective goods and services: garbage collection revisited

✍ Scribed by James T. Bennett; Manuel H. Johnson

• Publisher: Springer US
• Year: 1979
• Tongue: English
• Weight: 549 KB
• Volume: 34
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00125752

✦ Synopsis

Although many goods and services are consumed on a collective basis, it is not at all clear that they should also be publicly produced. As Musgrave (1959, p. 43) has observed, "the inapplicability of the exclusion principle refers to the demand, not to the supply, of the goods and services needed to supply public wants." Indeed, Robert Spann (1977) asserts that there are incentives inherent in private enterprise which are typically absent in governmental enterprise that lower the costs of privately produced goods and services that are collectively consumed. show that there is a greater incentive to shirk in public than in private enterprise, for the public employee's wealth is generally not affected by his decision. Moreover, the private f'u~n must meet the test of the marketplace which inefficient operations do not long survive, but revolution notwithstanding: Government firms, particularly those endowed with a politically influential clientele, can survive for long periods, and their managers prosper, in the presence of persistent deficits (let alone economic losses) and grossly inefficient management (De Alessi, 1974, p. 7) To assess the empirical evidence on whether the private production of goods and services is more efficient than public production, Spann reviewed five different activities: airline service, fire protection, health care and hospitals, electric utilities, and garbage collection. He concluded that:

For the majority of activities, private producers can provide the same services at the same or lower costs than can public producers. In some cases, the costs of private firms are half that of government agencies for producing the same goods or services (Spann, 1977, p. 88).