More On The Public Good Concept

Lynne Kiesling

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.

3 thoughts on “More On The Public Good Concept

  1. Neither lighthouses or GPS are public goods because they could be excludable, even though they are not now.

    Look at a navigation chart and you will see that lighthouses use coded information. One may sweep every 7 seconds, another every 9 seconds. Count the time between the lights and you know which light it is, your compass tells you the bearing. GPS is very similar – you know the distance to satellites with known positions; with lighthouses you know bearings.

    If you change the coding frequently, only those with the code can use the system. I am willing to bet that during wartime, lighthouses were only useful to the good guys, and each side went to great lengths to exclude the other guys.

    Of course, it is easier to make it non exclusive, but it would be easier to make DirectTV without a security card.

    GPS is also excludable.

    The system uses two different transmission codes. C/A code is available for everyone, but is limited in accuracy and is very easily jammed. The military code is more accurate and many times more secure against jamming, but you need a special key to use it. The software key is changed frequently. In wartime the good guys get the keys and the bad guys have useless handheld GPS systems.

    If the government wanted to charge for GPS, they could put an access key in the C/A code system. Think of DirectTV and the encrypted cards needed to operate them.

  2. There in fact was a serious proposal for a
    subscription position-locating service that pre-dated GPS. It used satellites and ground-based transponders. My recollection is that
    Gerald K O’Neill (of space habitat fame)
    was part of the venture, but Google didn’t
    help me …

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