Eric Helland, guest-blogging over at Marginal Revolution, posts on whether or not GPS is a good candidate as a public good. Like Eric’s colleague, I grapple with the public good concept (as Mike mentioned earlier this morning) and share the misgivings Eric reports. For me the question boils down to the degree of rivalry in consumption, and how big the externalities that are created are at the margin. The exclusion is almost always a choice, not an immutable characteristic, so on that dimension I fully agree with Eric’s colleague.
Here’s a thought: why couldn’t private agents build a GPS network? There’s nothing technologically preventing such a network from being excludable. And if they crank up the price to use it, why not lease satellite space from others to put up a parallel network? Is that contestabilitly sufficient to overcome the public good problem? So if GPS users have to pay to use the GPS network, then wouldn’t some pricing strategies evolve, like either build a license fee into the cost of the GPS device, or have subscription services? And what if some people want it one way and some want it another way? If there’s a way to do that, then it lessens the public good aspects of the network considerably.