public good outputs, including different, more refined or applied applications and
implemented ideas and principles, research, and so on. A good example of infrastructure with strong public and social components is language as it helps in the
production and exchange of knowledge and in the growth and operation of social
systems and interdependencies. Connecting communities and social systems gives
rise to a synergy which contributes to produce a wide range of public and social
goods. Such amenities are effectively obtained when the country’s infrastructure
include an efficient transportation and communications network,
Public and social infrastructure can be grouped into another category as they are
different from commercial infrastructure. In this latter group, it is easier to generate
and process information effectively from the competitive output markets, while in
the former class, it is slightly more difficult or complicated to obtain the required
input.
When public goods and social goods are produced, the infrastructure users rarely
quantify their benefits. Thus, there are valuation problems because it is difficult to
determine the effective social demand for the infrastructure service, good or resource
in market settings. For this type of infrastructure, competitive output markets will
only generate a demand reflecting individual benefits obtained by particular users
without considering positive externalities. These users are willing to pay for
accessing infrastructure only when they can get benefits from the outputs rather
than when society benefits. The valuation problems entail that infrastructure
suppliers – due to demand-side externalities linked to the production, distribution,
and use of the public and social goods – cannot determine the actual social demand,
and run the risk of undersupplying the infrastructure users.
Although the demand-side problems for public and social infrastructure are
comparable in form, there are some important variances between the two types,
that need to be highlighted.
Markets can offer public goods with varying degrees of effectiveness. Production
externalities can usually be traced to the capacity for sharing the resource. Sharing
the good may create external effects that are not seen, adopted, or otherwise
considered (internalized) by the producer. The production of a public good may
produce external effects, which, however, are influenced by the access and consumption/use conditions.
Social goods differ from public goods in the way value is generated and the
demand-manifestation problems are connected with different types of external
effects.
Social goods may produce very large external benefits that are impossible –
infinitely costly – to internalize. The high costs may be attributed to the very nature
of the effects, their diffusivity, and their reliance on systems, social relationships and
interdependencies. However, such externalities can sometimes be avoided. Social
goods often need substantial investment, proper coordination, development and
commitment. Very often, they rely on the infrastructure available and the community
of infrastructure users.
17.7 Commercial, Public and Social Infrastructure
489
implemented ideas and principles, research, and so on. A good example of infrastructure with strong public and social components is language as it helps in the
production and exchange of knowledge and in the growth and operation of social
systems and interdependencies. Connecting communities and social systems gives
rise to a synergy which contributes to produce a wide range of public and social
goods. Such amenities are effectively obtained when the country’s infrastructure
include an efficient transportation and communications network,
Public and social infrastructure can be grouped into another category as they are
different from commercial infrastructure. In this latter group, it is easier to generate
and process information effectively from the competitive output markets, while in
the former class, it is slightly more difficult or complicated to obtain the required
input.
When public goods and social goods are produced, the infrastructure users rarely
quantify their benefits. Thus, there are valuation problems because it is difficult to
determine the effective social demand for the infrastructure service, good or resource
in market settings. For this type of infrastructure, competitive output markets will
only generate a demand reflecting individual benefits obtained by particular users
without considering positive externalities. These users are willing to pay for
accessing infrastructure only when they can get benefits from the outputs rather
than when society benefits. The valuation problems entail that infrastructure
suppliers – due to demand-side externalities linked to the production, distribution,
and use of the public and social goods – cannot determine the actual social demand,
and run the risk of undersupplying the infrastructure users.
Although the demand-side problems for public and social infrastructure are
comparable in form, there are some important variances between the two types,
that need to be highlighted.
Markets can offer public goods with varying degrees of effectiveness. Production
externalities can usually be traced to the capacity for sharing the resource. Sharing
the good may create external effects that are not seen, adopted, or otherwise
considered (internalized) by the producer. The production of a public good may
produce external effects, which, however, are influenced by the access and consumption/use conditions.
Social goods differ from public goods in the way value is generated and the
demand-manifestation problems are connected with different types of external
effects.
Social goods may produce very large external benefits that are impossible –
infinitely costly – to internalize. The high costs may be attributed to the very nature
of the effects, their diffusivity, and their reliance on systems, social relationships and
interdependencies. However, such externalities can sometimes be avoided. Social
goods often need substantial investment, proper coordination, development and
commitment. Very often, they rely on the infrastructure available and the community
of infrastructure users.
17.7 Commercial, Public and Social Infrastructure
489