Government pest control often backfires, encouraging more of the very scourge it was instituted to contain. This is often referred to as the “cobra effect,” after an episode where government bounties on serpent tails encouraged the emergence of profit-seeking snake-breeders. Though public pest control often generates problems like these, some voice the following concern: Even if it’s true that government pest eradication isn’t perfect, might it be the best we have? What if pest control is a public good?
The standard theory of public goods holds that there are certain goods that markets are incapable of providing. On this view, markets fail because market mechanisms are incapable of excluding free riders — those who like consuming the good but refuse to pay for it. For example, economists famously reasoned that entrepreneurs are incapable of producing a fireworks show since observers from miles around can observe the display without paying.
Private Provision of Public Goods
When private parties own a sufficiently large chunk of real estate, excluding non-payers becomes feasible. The same logic can be applied to pest control. Venomous snakes slithering through the streets clearly poses a safety risk. One might reason that snake eradication is undoubtedly a costly endeavor, and, unable to exclude free riders, no private property would undertake a campaign to eliminate the dangerous pests. After all, everyone in the community benefits when the cobras are eliminated, but the intrepid individual who undertakes this task has no way to charge beneficiaries. Snake elimination, then, is under-supplied.
Too often, this evergreen criticism of markets is botched. Specifically, many goods commonly understood as “public goods” only assume those characteristics because government owns the relevant real estate.
It’s instructive to note that private organizations like Disney World routinely provide fireworks displays. Additionally, tens of thousands of neighborhood associations offer annual 4th of July celebrations that involve dazzling displays of pyrotechnics — all this despite the standard theory which would indicate such a show is impossible.
Markets’ defiance of textbook economics stems from the fact that when private parties own a sufficiently large chunk of real estate, excluding non-payers becomes feasible.
Private vs. Public Property
Don’t be so quick to conclude that something is a public good. Private parties can provide fireworks displays because the organization’s owner can charge individuals a fee before allowing them on the organization’s property. Disney World attendees don’t pay for the fireworks show separately — it’s merely bundled into the price of entrance to the park. Neighborhood associations work similarly. Some portion of the yearly fees goes toward funding a fireworks show. Those who don’t value the show are free to choose a neighborhood that doesn’t show them and thus charges lower fees as a result.
This brings us back to pest eradication. When cobras are slithering through public streets, it may be true that no private party is willing to undertake their eradication, since excluding non-payers is costly or impossible. Should those same snakes find themselves in Disney World, it’s easy to see the incentive Disney World owners have. After all, they’d quickly find that demand to enter Disney World would quickly fall (probably to zero) should patrons find themselves confronting such a dangerous menace inside the park’s confines.
Don’t be so quick to conclude that something is a public good. Some goods only assume the telltale “public good” characteristics because government owns the real estate where the good is currently supplied.