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These are all examples of what economists call public goods , sometimes referred to as collective goods. Unlike private property, they are not excludable and are essentially infinite. Forests, water, and fisheries, however, are a type of public good called common goods , which are not excludable but may be finite. The problem with both public and common goods    is that since no one owns them, no one has a financial interest in protecting their long-term or future value. Without government regulation, a factory owner can feel free to pollute the air or water, since he or she will have no responsibility for the pollution once the winds or waves carry it somewhere else (see [link] ). Without government regulation, someone can hunt all the migratory birds or deplete a fishery by taking all the fish, eliminating future breeding stocks that would maintain the population. The situation in which individuals exhaust a common resource by acting in their own immediate self-interest is called the tragedy of the commons .

An image of a power plant with large columns of smoke billowing out of its four towers.
Air pollution billows from a power plant before the installation of emission control equipment for the removal of sulfur dioxide and particulate matter. Can you see why uncontrolled pollution is an example of the “tragedy of the commons”?

A second problem with strict adherence to free-market economics is that some goods are too large, or too expensive, for individuals to provide them for themselves. Consider the need for a marketplace: Where does the marketplace come from? How do we get the goods to market? Who provides the roads and bridges? Who patrols the waterways? Who provides security? Who ensures the regulation of the currency? No individual buyer or seller could accomplish this. The very nature of the exchange of private goods requires a system that has some of the openness of public or common goods, but is maintained by either groups of individuals or entire societies.

Economists consider goods like cable TV, cellphone service, and private schools to be toll goods . Toll goods are similar to public goods in that they are open to all and theoretically infinite if maintained, but they are paid for or provided by some outside (nongovernment) entity. Many people can make use of them, but only if they can pay the price. The name “toll goods” comes from the fact that, early on, many toll roads were in fact privately owned commodities. Even today, states from Virginia to California have allowed private companies to build public roads in exchange for the right to profit by charging tolls.

David Mildenberg, “Private Toll Road Investors Shift Revenue Risk to States,” 26 November 2013. http://www.bloomberg.com/news/articles/2013-11-27/private-toll-road-investors-shift-revenue-risk-to-states (March 1, 2016).

So long as land was plentiful, and most people in the United States lived a largely rural subsistence lifestyle, the difference between private, public, common, and toll goods was mostly academic. But as public lands increasingly became private through sale and settlement, and as industrialization and the rise of mass production allowed monopolies and oligopolies to become more influential, support for public policies regulating private entities grew. By the beginning of the twentieth century, led by the Progressives, the United States had begun to search for ways to govern large businesses that had managed to distort market forces by monopolizing the supply of goods. And, largely as a result of the Great Depression, people wanted ways of developing and protecting public goods    that were fairer and more equitable than had existed before. These forces and events led to the increased regulation of public and common goods, and a move for the public sector—the government—to take over of the provision of many toll goods.

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Source:  OpenStax, American government. OpenStax CNX. Dec 05, 2016 Download for free at http://cnx.org/content/col11995/1.15
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