The Lighthouse in Economics
![handle is hein.journals/jlecono17 and id is 361 raw text is: THE LIGHTHOUSE IN ECONOMICS*
R. H. COASE
University of Chicago Law School
I. INTIODUCTION
TnE lighthouse appears in the writings of economists because of the light it
is supposed to throw on the question of the economic functions of government.
It is often used as an example of something which has to be provided by
government rather than by private enterprise. What economists usually seem
to have in mind is that the impossibility of securing payment from the
owners of the ships that benefit from the existence of the lighthouse makes it
unprofitable for any private individual or firm to build and maintain a light-
house.
John Stuart Mill in his Principles of Political Economy, in the chapter Of
the Grounds and Limits of the Laissez-Faire or Non-Interference Principle,
said:
.. it is a proper office of government to build and maintain lighthouses, establish
buoys, etc. for the security of navigation: for since it is impossible that the ships
at sea which are benefited by a lighthouse, should be made to pay a toll on the
occasion of its use, no one would build lighthouses from motives of personal
interest, unless indemnified and rewarded from a compulsory levy made by the
state.1
Henry Sidgwick in his Principles of Political Economy, in the chapter, The
System of Natural Liberty Considered in Relation to Production, had this
to say:
. . there is a large and varied class of cases in which the supposition [that an
individual can always obtain through free exchange adequate remuneration for
the services he renders] would be manifestly erroneous. In the first place there
are some utilities which, from their nature, are practically incapable of being
* It is with great pleasure that I acknowledge the helpfulness of members of Trinity
House and of officials in the Department of Trade and of the Chamber of Shipping in
providing me with information on the British lighthouse system. They are not, however,
in any way responsible for the use I have made of this information and should not be
presumed to share the conclusions I draw.
lJohn Stuart Mill, Principles of Political Economy, in 3 The Collected Works of
John Stuart Mill 968 (ed. J. M. Robson, 1965).
357](ViewImageLocal?handle=hein.journals/jlecono17&div=22&collection=journals&method=preview&ext=.png&size=3)
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The Lighthouse in Economics
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