Law and Public Goods

“To the extent that law embodies the contractual origins discussed above, or that law may be conceptually explained on the “as if”presumption of such origins, law-abiding exerts a pure external economy. This feature distinguishes law from the more orthodox public-goods interactions among persons. For comparison here, we may look at one of the classic examples, the provision of lighthouse services for a community of fishermen…

With “law,”however, no such results emerge, regardless of group size. Precisely because law-abiding is a pure external economy, and as such involves behavior from which the actor secures no private, personal reward, an economic model would predict an absence of all such behavior in the strictly individualistic setting.

A second possible difference between “law”and the more familiar lighthouse example of public good may be mentioned. In the latter, even if cost configurations suggest that no person independently invests resources in generating the external economy, cooperative, club-like arrangements may be made among two or more persons but substantially fewer than the whole community membership.”

Buchanan, James M. The Limits of Liberty: Between Anarchy and Leviathan. Indianapolis, IN: Liberty Fund, Inc. 1999. Library of Economics and Liberty [Online] available from https://www.econlib.org/library/Buchanan/buchCv7c7.html; accessed 26 August 2012; Internet

Author: international