Explain whether expressways and traffic lights can be defined as public goods.

Explain whether expressways and traffic lights can be defined as public goods. [10]

Introduction

Public goods are goods that are both non-rivalrous and non-excludable and are not provided for by the free market.

Defining public goods 

Public goods

1.      Non-excludability:The prevention of non-paying consumers from consuming the good is impossible or prohibitively costly to do so

2.     Non-rivalry: The cost of an additional consumer will not raise the overall total cost of the provision of a good nor diminish the total quantity available of the same good

Evaluating if the above cases are public goods

Expressways

1.      Can be non-excludable. While it is technically possible to exclude a single specific expressway from consumption by erecting barriers/toll booths/the ERP system, it will be prohibitively expensive to do so for expressways (expressed in plural form).

2.      Generally considered to be non-rivalrous since a motorist’s consumption/usage of the expressway does not make it any less available to another motorist 

3.      However, it may be rivalrous on certain stretches of expressways; during peak hours, a motorist can contribute to greater congestion and the satisfaction derived from the usage may fall (there may be costs due to loss of productivity due to time lost).

4.      Considered a public good

Traffic lights

1.      Traffic lights provide safety and efficiency through the smooth regulation of traffic for both pedestrians and motorists.

2.      It is considered non-excludable because anyone can make use of such traffic lights. There is no way to exclude any specific group of users to benefit from safety provided by traffic lights.

3.      It is considered non-rivalrous since the amount of safety provided does not diminish or change even if there are more pedestrians or motorists using the same traffic light.

4.      It is considered a public good.

Conclusion

Both traffic lights and expressways are viewed to be public goods as such.

Comments

Note that we are really forcing ‘expressways’ into the strict definition of a public good when it can actually be argued otherwise. One can ‘exclude’ the use of specific expressways from being used by non-payers (think: North South highway in Malaysia). However, such exclusion will be prohibitively expensive to do so considering the number of exits that an expressway may have, barriers will need to be erected and manpower to monitor such that tolls can be collected. Also, expressways may not necessarily satisfy the definition of ‘non-rivalry’ during congestion hours.