This possibility of both A and B being allowed to use the method is a significant
parameter. This additional degree of freedom is not available when dealing with
rival resources, and there are possibilities for leveraging the resource capacity to
yield augmented social returns. The three economic principles pertinent to rival
goods do not apply, and the trade-off between static and dynamic efficiencies
becomes more complicated.
Demandside problems crop up where nonrival capital is used to produce several
types of outputs, inter alia, public goods and social goods. If the resource is shared to
facilitate these productive activities, other beneficial effects external to the market
mechanism may result. In some cases, the social benefits obtained, by accessing a
nonrival input more easily for the production of such goods, may be quite substantial, but, nevertheless, understated in markets. A demandside analysis is essential to
estimate the value of nonrival inputs, (1) in measuring the actual value of the
resource and (2) in explaining how the resource generates social value. These
tasks are related, but the true social value of infrastructure resources can only be
grasped when one examines the downstream uses and applications. At least, policy
decisions designed at balancing static and dynamic efficiency gains should explicitly
consider these.
17.4 Social Goods
Social values may be incorporated in economic analysis by considering a category of
social goods by defining the good, isolating its characteristics, and distinguishing it
from other categories of goods. This section discusses four types of goods:
• nonmarket goods,
• merit goods,
• social capital, and
• irreducibly social goods
which do not fit neatly within the economic classification discussed earlier.
Each involves social value not well acknowledged in markets and highlights
characteristics that differentiate social goods. Generally, social goods produce value
through their impact on social interdependencies/systems. Although it might be
difficult to observe, measure, or obtain such a value, this does not imply that it is
insignificant, noneconomic, or not recognized in economic analysis.
17.4.1 Nonmarket Goods
When the environment and ancillaries are discussed, natural resources, ecosystems,
and various environmental services make their appearance. These may be critical to
human life, but are not sold in or provided by markets. These resources have been
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17 Infrastructure as Public or Private Goods
parameter. This additional degree of freedom is not available when dealing with
rival resources, and there are possibilities for leveraging the resource capacity to
yield augmented social returns. The three economic principles pertinent to rival
goods do not apply, and the trade-off between static and dynamic efficiencies
becomes more complicated.
Demandside problems crop up where nonrival capital is used to produce several
types of outputs, inter alia, public goods and social goods. If the resource is shared to
facilitate these productive activities, other beneficial effects external to the market
mechanism may result. In some cases, the social benefits obtained, by accessing a
nonrival input more easily for the production of such goods, may be quite substantial, but, nevertheless, understated in markets. A demandside analysis is essential to
estimate the value of nonrival inputs, (1) in measuring the actual value of the
resource and (2) in explaining how the resource generates social value. These
tasks are related, but the true social value of infrastructure resources can only be
grasped when one examines the downstream uses and applications. At least, policy
decisions designed at balancing static and dynamic efficiency gains should explicitly
consider these.
17.4 Social Goods
Social values may be incorporated in economic analysis by considering a category of
social goods by defining the good, isolating its characteristics, and distinguishing it
from other categories of goods. This section discusses four types of goods:
• nonmarket goods,
• merit goods,
• social capital, and
• irreducibly social goods
which do not fit neatly within the economic classification discussed earlier.
Each involves social value not well acknowledged in markets and highlights
characteristics that differentiate social goods. Generally, social goods produce value
through their impact on social interdependencies/systems. Although it might be
difficult to observe, measure, or obtain such a value, this does not imply that it is
insignificant, noneconomic, or not recognized in economic analysis.
17.4.1 Nonmarket Goods
When the environment and ancillaries are discussed, natural resources, ecosystems,
and various environmental services make their appearance. These may be critical to
human life, but are not sold in or provided by markets. These resources have been
480
17 Infrastructure as Public or Private Goods