Goods Specificity and Their Safeguards

Abstract

The article emphasizes that there is currently in general a consensus on the fact that there is a wide variety of goods, but there is no consensus on the choice of the only acceptable approach to their classification for all. Among the approaches, we can note those based on a dichotomy (either private or public goods) and a continuum (there are no clear boundaries between private and public goods and all their intermediate variants). The article focuses on the first approach in order to make the visual representation of goods more simplified and intuitive. With this in mind, theoretical approaches to the classification of goods with an emphasis on public interest in some of them, which causes the need for guardianship (patronization) over them, are studied. The starting point is a simple contractual scheme of Williamson, adapted to solve the problem of specificity, however not of assets, but of goods, meaning primarily private and public goods. The traditional expression of this problem is the «freerider» problem, when the need for a public good is not supported by the desire to pay for it. Public goods, whether merit (positive externalities, for example) or demerit (negative externalities), need protective mechanisms, such as patronization – from the state and/or society. Some features of patronized goods and safeguards, or mechanisms for their protection are discussed. It is particularly emphasized that public goods and goods that are likened to them in some sense exist in a certain dynamic institutional environment, the quality of which largely depends on the adequate choice of institutions that can reinforce each other or weaken them if they are not adequately chosen. The mentioned goods are analyzed on the example of water resources, whose specificity, in particular, is manifested in the fact that decision-makers and local authorities can use automatic irrigation systems to produce social (collective, locally public) goods, for example, urban green landscape. In this sense, such systems, being private goods, can act as factors of production of social goods.