On the Erosion of Public Facilities∗

Abstract

The failure of a market system to produce efficient of public goods is conceptually equivalent to failure to eliminate public bads in sufficient quantity. The usefulness of this view of public goods case lies in insight it provides into problem, often neglected in literature, that public facilities, once provided, often tend to erode quickly. [Buchanan] When market behavior results in excessive public bads, there are in theory three approaches to deal? ing with problem: 1) Behavior may be modified so that bads are not excessive; 2) The institutional framework may be altered such that market no longer fails?which largely involves de? fining property rights and minimizing transactions costs; 3) Collec? tive action may be taken to eliminate public bads (produce public goods). For example, market in main fails to respond to demand for recreational parks. If individuals were to voluntarily contribute according to their use of such facilities (a behavioral change), or if some method of inexpensively preventing free riders could be devised (an institutional change), sufficient parks would be provided by private market. Otherwise, third alternative is publicly provided parks. If behavioral or institutional changes are feasible, public bads are permanently eliminated, since private incentives that produced them have been removed. In contrast, if public goods are provided through collective action, individuals con? tinue to have the same incentives for allowing a public facility or service to erode, to run down, to be destroyed, as they do for failure to provide goods or services in efficient quantities in first place. [Buchanan, p. 66] This erosion is a public bad not theore? tically different from public bad that collective action sought to eliminate. A complete theory of public sector must be concerned not merely with provision of public goods, but also with effective usage of existing facilities. Our purpose in this paper is to explore briefly nature and causes of this erosion of public facilities.