Public goods and the public good.

• Author: Soderbaum, Fredrik

Public goods have become widely discussed in policy circles during the last five to ten years. The concept originates from economic theory and traditionally refers to a national economic system where it constitutes the essence of nation-building, particularly the modern welfare State. In contrast, the current interest in transnational public goods is a consequence of the erosion of national sovereignty, territoriality and authority in the context of globalization. The discussion has thus moved from national economy into a transnational and globalized world, which is partly the reason why it has become so complex. This raises the difficult question of how public goods can be financed, produced and distributed on the global and regional levels where they are badly undersupplied. We need to transcend the dominating notion in the field that emphasizes the competition between different types of public goods and instead move towards complementarity between global and regional public goods.

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Public goods essentially mean that they are "non-rival" in consumption and their costs and benefits are "non-excludable". Peace and security, as well as law and order, are often referred to as "pure" public goods; whereas, for instance, a shared water ("common pool") resource is often "non-excludable" but "rival" in consumption. In other words, the distinction between global and regional public goods is not very sharp, but it is clear that some "problems without passports" emerge within specific regions and are best managed through regional cooperation.

Undoubtedly, there is growing regional cooperation as a way of dealing with transnational challenges and public goods of many kinds. One reason for focusing on regional cooperation is the lack of politically grounded problem-solving at the global level, where it is comparatively more institutionalized, but where new challenges still tend to be neglected. As a result, regional cooperation has become an important tool for addressing not only regional but also genuinely global challenges, such as financial stability, peace and security, and health. Nevertheless, an exclusive focus on the regional level and regional public goods per se would be misplaced.

It is conventional in the public goods literature to develop detailed classification schemes and typologies in order to determine the so-called incentive structures for the provision of public goods. It is also commonplace to distinguish between goods at different levels. The question of whether goods are defined as "regional" (with a spillover range confined to a region) or "global" (with a universal or semi-universal spillover range) affects policy recommendations. Another principle, "subsidiarity", has also received a lot of attention. For many observers and policymakers, subsidiarity implies that, depending on spillover range, there is a corresponding first-best institutional solution at the lowest possible level. According to Kanbur, Sandler and Morrison, "subsidiarity dictates regional and sectoral decentralization". (1) However, decentralization must not be carried too far since it tends to favour "single-level" solutions. At least, to some extent, it also creates a rather false dichotomy between global and regional public goods.

In a situation where there are...