A beautiful drill down on the history of "public goods" theory, and the role of technology in making them more powerful, cheaper, and unprofitable!
An Update Concerning the Economics of Lighthouses
Lighthouses have been a canonical example for economists--but what that example is intended to illustrate has shifted dramatically over time.
-- via my feedly newsfeed
The role of the government was limited to the establishment and enforcement of property rights in the lighthouse. ... [E]conomists wishing to point to a service which is best provided by the government should use an example which has a more solid backing.
The French Lighthouse Commission placed Fresnel in charge of a massive overhaul of the French lighthouse system known as the Carte des phares. ... Instead of focusing on port entrances alone, the plan was now to form a rational network which would illuminate the entire coast, so that whenever a ship went out of sight of one lighthouse, it would already be entering into sight of another. ... Fresnel divided the lights into different orders based on their size, with the largest, first-order lights warning of a ship's first approach to the coast, second-order lights aiding in the navigation of tricky passages, and the smaller "feux de port" marking port entrances. ...Levitt makes a case that when John Stuart Mill was writing about lighthouses back in 1848, he was well aware of these changes. It turns out that one of Mill's childhood teaches was a British leader in efforts for upgrading Britain's lighthouses, which for a long time lagged behind those of France. The US soon adopted the French approach.
One of the key attributes of the system was that it would allow mariners to distinguish between the lights, and thus know their precise location at all times. Fresnel proposed three distinct light signatures: a rotating light of eight bulls-eye panels that flashed every minute, a rotating light of sixteen panels that flashed every thirty seconds and a fixed light that gave out a continuous beam . The rotating lenses were mounted on columns that were turned first by an escapement mechanism, then by chariot wheels, and finally on a mercury bath (an idea conceived by Fresnel but not put into practice until the 1890s). The parabolic apparatus could also be rotated to produce a distinct flashing light. But Fresnel went one step further: carefully arranging the various lights so that no two similar ones were alike, and, with the visibility of lights overlapping, a sailor would be able to identify their location with precision. Jules Michelet commemorated the completion of the project in 1854 with the phrase, "For the sailor who steers by the stars, it was as if another heaven had descended to earth."
The United States had leapfrogged over Britain as well after adopting the French model of lighthouse provisioning. The colonies built ten lighthouses under British rule ... The federal government appropriated them in 1789 in the first application of the Commerce Clause. Substantial investment in infrastructure only came in the 1850s, however, when a coalition of sailors, scientists, and engineers demanded the creation of a lighthouse board modeled on the French Lighthouse Committee. This board effected a massive, tax-funded program of new building and updated technology, and by the end of 1859 the United States had more than twice as many lighthouses as the British, virtually all of them equipped them with Fresnel lenses.Thus, the history of lighthouses suggests a lesson that for focused and local projects with static technology, a public-private partnership can work well. But for development and investment in a new technology which will be applied to an interconnected national network where it is difficult to charge end-users for value received, government may usefully play a larger role. Levitt writes:
This fact can also help us understand the lighthouse's transformation into a public good. When lights simply marked harbors, one could charge every ship that entered the harbor. But when a light marked some empty, desolate stretch of coast, it was not so easy to charge whoever happened to pass by. Rather than being "plucked from the air," Mill's position accurately reflected the new situation. ... A more detailed study of lighthouse administration supports the status of the lighthouse as a public good: the private market failed to either develop or invest in the technology necessary to establish the effective sea-coast lights now associated with the term "lighthouse."
-- via my feedly newsfeed