Public Goods: Market Failure or the Failure of the Theories?

Public goods are generally perceived as market failure and consequently are thought to be subject to public intervention. However, when mainstream theories are closely examined, one can see that there is no consensus on the characteristics of public goods that would justify public provision, hence there are many objections to the public provision of such goods. The main thesis of this study is that the concept of public goods is inadequate to describe the publicness of goods, and corresponding theories also fail to clearly explain even what they themselves theoretically devised. To investigate this thesis, it is examined whether public goods theory has a satisfactory explanation about publicness of goods as well as optimal provision, collective decision making processes and market failure. These are comparatively studied by the views of main economic schools of thought that contribute to the theory of public goods - traditional neoclassical economics, public choice school and new institutionalist economics. Finally, the basis common to all these theories are critically evaluated.