Market failure,government failure,and the private supply of public goods: The case of climate-controlled walkway networks

Two opposing models of public-goods undersupply are those of “market failure” and “government failure”. Empirical work on the relative explanatory power of these two frameworks has been limited by the scarcity of acceptable data. The case of climate-controlled walkways in major urban cores is a rare instance where such difficulties can be overcome. We investigate the supply of CCWs in 55 large city-cores in North America. We find that (1) CCW networks are well-supplied by market forces, when (2) such forces are not frustrated by government policy. We also find evidence that (3) rules-based regimes dominate discretion-based regimes. These results are consistent with the position that the “government-failure” paradigm is a viable alternative to the traditional “market failure” paradigm.