In an essay on telecommunications pricing, Andrew Odlyzko spends some time reviewing the controversy about whether a lighthouse is necessarily a public good.

As an example, a recent commentary [68] claimed that Coase had shown that “[i]nstead of the government-sanctioned ‘light dues’ charged by Trinity House, developers persuaded ship-owners to sign up in advance for voluntary tolls.” This claim from [68] is incorrect, as are many of the conclusions commonly drawn from Coase’s paper. In defense of Coase, it has to be said that in his paper he never referred to \voluntary tolls.” However, his paper uses very ambiguous language to describe the English lighthouse system, and is deeply flawed. Amazingly enough, even though any serious economic historian should have been able to see instantly the faults in the paper, it continued to be accepted uncritically for a quarter of a century. The first debunking appears to have been by Richard Epstein in 1999 [19], and a more thorough one was presented by Daniel Davis in 2002 [14].

Somebody should tell Odlyzko that d-squared spells his last name Davies, not Davis. In any event, Odlyzko points to history showing that “private” lighthouse owners acted more like government agents.

For Discussion. Why is the lighthouse issue so near and dear to the hearts of economists?