Public Goods, Externalities, and Collective-Action Problems of Governance
Public Goods, Externalities, and Collective-Action Problems of Governance
This chapter addresses the book’s first developmental hypothesis and its relations to CAPs that complicate establishing functional governance: Development requires creating social arrangements that deliver key public goods and services and that concurrently mitigate important negative externalities. Externalities are either positive or negative impacts of economic or political interactions on the noninvolved. Negative externalities include pollution and the spread of contagious disease; they arise from activities such as coal-powered electricity generation, crime, lack of sanitation, overuse of natural resources (e.g., deforestation), and excess conflict. Using game-theoretic logic, this chapter develops a few simple models that illustrate the basic CAPs and more detailed models that address how the political and economic incentives of rival coalitions influence the ability and motivation of governments to develop, utilize, and broadly or selectively apply state fiscal and legal capacity.
Keywords: public goods, governance, externalities, collective-action problems, ruling coalition, rule of law, selective enforcement, capacity trap
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