Public Goods

The idea of public goods has been subject to considerable debate and contestation. The term is generally used to classify products or services that are not diminished through usage and for which charges cannot be levied on individual consumption (e.g., street lighting). The concept of public goods is significant for media and communication scholars because it potentially applies to some forms of broadcasting and informational or audiovisual products and services. Such classifications also have implications for contemporary media policy debates concerning the regulation of communication technologies and the legitimate role of state intervention in market activities.

Theoretical Considerations

In contemporary economic theory, the notion of public goods refers to products or services that exhibit the two key characteristics of nonrivalry and nonexcludability (Ver Eecke 1999; Shankar & Pavitt 2002). Nonrivalry means that the consumption of the goods by one person does not preclude consumption by another. When, say, a loaf of bread is eaten, it ceases to be available to anyone else. In contrast, the reception of a television program can be extended to extra viewers at no additional cost without diminishing its availability (i.e., Pareto efficiency; see Samuelson 1964; Minasian 1964). Nonexcludability, meanwhile, means that there is no technically practical or cost-effective way of preventing additional consumption without payment (free riding). For example, if a community organized a neighborhood patrol to deter crime, any increase in security would extend to all residents in the area irrespective of whether they personally contributed to the initiative. Likewise, an unencrypted broadcast or Internet website can potentially be used by an unlimited number of nonpaying users. If consumers of the product or service cannot be required to pay, the private sector is likely to underprovide them in a purely commercial market (Ver Eecke 1999).

Goods that are excludable and rivalrous are more likely to be provided by the private sector. However, market inefficiencies in pricing and information mechanisms mean that goods that are socially beneficial may also be undersupplied or underconsumed. Products and services that confer benefits external to individual private consumption are known as merit goods (Fiorito & Kollintzas 2002). For example, commercial broadcasters often prioritize populist genres that maximize ratings and revenue rather than educational programs that may enhance informed citizenship.

The underprovision of public/merit goods is an important consideration in explaining the role of the state or public sector in economic theory. Some scholars categorize particular products or services as intrinsic public/merit goods that require state provision or subsidy (e.g., national defense, public parks, or public service broadcasting). However, there is both theoretical and political disputation about which goods and services – if any – require state intervention and the extent to which this should complement or substitute for their provision by the private sector (Ver Eecke 1999; Fursich & Roushanzamir 2001). Although distinct, public, private, and merit goods are therefore better understood as ideal types that are not necessarily mutually exclusive in their application to empirical examples (Ver Eecke 1999). For example, a public broadcaster might include light entertainment in the schedule that a subscription broadcaster provides as a private good, while a commercial free-to-air broadcaster’s schedule could include news and documentaries with merit-good value (see Anderson & Coate 2000; Samuelson 1964; Minasian 1964).

Regulatory And Technological Issues

The trend toward international free trade regimes has increased pressure on governments to restrict their provision of public/merit goods to cases of demonstrable market failure. In the EU, for instance, public broadcasting interventions must be clearly delineated and proportionally funded to avoid market distortion. However, the assumption that efficient commercial markets are a natural state of affairs overlooks the point that economic activity is embedded in social, political, and legal institutional arrangements (e.g., enforcement of property laws). Whether or not a product or service can be categorized as public or private depends on these underlying structures. Consequently, reconfigurations of regulatory and technological arrangements alter the base conditions upon which the classification and legitimization of public goods are premised.

Informational or audiovisual goods are particularly contentious because different institutional arrangements potentially alter their nonrivalrous or nonexcludable character.

This is reflected in recent tensions between commercial and open-source software providers and controversies over Internet-based media file-sharing services such as Napster (see Becker & Clement 2006; also Stewart et al. 2004). The combination of market liberalization, digitalization, and media convergence is especially significant here: Digital media facilitate the potentially unlimited replication (nonrivalry) and distribution (nonexcludability) of informational or audiovisual goods. However, artificial scarcity (i.e., the elimination of nonexcludability) can be imposed through conditional access or encryption technology and intellectual property regulations. The potential to transform public goods into private goods and vice versa explains why these concepts are subject to ideological, legal, and technical contestation.

References:

1. Anderson, S., & Coate, S. (2000). Market provision of public goods: The case of broadcasting. NBER Working Paper No. 7513, January. Cambridge, MA: National Bureau of Economic Research.
2. Becker, J. U., & Clement, M. (2006). Dynamics of illegal participation in peer-to-peer networks: Why do people illegally share media files? Journal of Media Economics, 19(1), 7–32.
3. Fiorito, R., & Kollintzas, T. (2002). Public goods, merit goods, and the relation between private and government consumption. CEPR discussion paper No. 3617. Athens: Athens University of Economics and Business.
4. Fursich, E., & Roushanzamir, E. P. L. (2001). Corporate expansion, textual expansion: Commodification model of communication. Journal of Communication Inquiry, 25(4), 375–395.
5. Minasian, J. R. (1964). Television pricing and the theory of public goods. Journal of Law and Economics, 7, 71–80.
6. Samuelson, P. A. (1964). Public goods and subscription TV: Correction of the record. Journal of Law and Economics, 7, 81–83.
7. Shankar, A., & Pavitt, C. (2002). Resource and public goods dilemmas: A new issue for communication research. Review of Communication, 2(3), 251–272.
8. Stewart, C. M., Gil-Egui, G., & Pileggi, M. S. (2004). The city park as a public good reference for Internet policy making. Information, Communication and Society, 7(3), 337–363.
9. Ver Eecke, W. (1999). Public goods: An ideal concept. Journal of Socio-Economics, 28(2), 139–156.