The assiduous Vincent Geloso returns to the podcast to discuss his work with Rosolino Candela on lightships and their importance in economics. The abstract of their paper reads as follows:
Economists have been using lighthouses as examples of pure public goods since at least John Stuart Mill. This modern debate on whether lighthouses really deserve their status as the archetypical example goes back to Coase (1974), who pointed out that many lighthouses in Great Britain had been privately funded through harbour fees. According to the theory of pure public goods, free riding should have destroyed this market, but it didn't. This has sparked a spirited debate about just how private those "private" lighthouses were, and whether the level of government intervention in the lighthouse market was necessary to solve the free rider problem.
Candela and Geloso's work on lightships shows that a pure private solution to the lighthouse problem actually existed historically. They detail the launching of the first lightship by the entrepreneurs David Avery and Robert Hamblin at the mouth of the Thames River in 1731, and the ways they were able to finance this apparently "public" good.