When Lighthouses became Public Goods: The Role of Technological Change.

Abstract

A comparison of the French and English lighthouse systems reveals the benefits of state intervention in technological development. The French system, funded by the state, produced major innovations such as the Fresnel lens, and was the first to achieve comprehensive sea-coast lighting. The English system, dominated by private ownership early on, failed to either develop or invest in these innovations. The comparison also sheds light on the emerging category of the public good. Economist Ronald Coase has questioned the lighthouse's longstanding position as a canonical example of the public good by arguing that in seventeenth- and early eighteenth-century England, lighthouses were successfully provided by a private market. Yet his argument ignored the fact that technological changes in the eighteenth and nineteenth century transformed not only the cost and effectiveness of lighthouses, but also their function, economic role, and potential for excludability.