Joint Supply, the Taussig-Pigou Controversy, and the Competitive Provision of Public Goods

Abstract

AN impressive coterie of contemporary writers who have sought to explain and analyze supply and demand of public goods have done so in terms of a model very much like classic Marshallian joint supply theory.1 Buchanan has noted, for example, that the theory of joint supply that is found in Marshall's Principles is, in its fundamental respects, equivalent to theory of public goods.2 The purpose of this paper is to explore in detail implications of this assertion. We seek to demonstrate that theories of joint supply and public goods are not logically equivalent, and that in some instances attempted application of joint supply model to analysis of public goods has caused analytical mischief. Further, we find that certain of fundamental points which emerged in railway rate theory debates originating eighty years ago between F. W. Taussig and A. C. Pigou are directly applicable to current problem of distinguishing between theories of joint supply and public goods.3 That is, much of present confusion