Concepts related to public goods — using weekend markets as an example
First, the weekend market is a market held in a square or parking lot on weekends. Vendors can apply for a stall and pay a certain rent to set up a stall, and then everyone can come and visit. Some sell food, some sell flowers or handmade products, and some come to play music. It looks something like this:
This market is the so-called public land, which means it is an open space where everyone can come to play and enjoy the activities and goods on this public land.
On this public land, there is competitive and exclusionary relationship between the stalls selling goods, especially evident among the breakfast stalls. Because people's appetites are limited, if they eat a hot dog, they are less likely to eat a basket of dumplings. This is the competitive aspect. Among the limited number of visitors, the more people who eat from my stall, the more I earn.
When specific items are bought by others, there is exclusionary. Once a product is sold to buyer A, it cannot be sold to buyer B. Similarly, merchants also have the ability to control whether to sell to a certain type of person, which is the so-called exclusionary. When I went, it was a bit late, so the good figs had already been picked.
On this public land, there is also a type of stall that has both non-exclusionary and non-competitive characteristics, which is called public goods. Yes, in the context of the weekend market, this is the stall where music is played.
Non-exclusionary is reflected in:
1) You can listen to the music without paying.
2) The musician cannot make specific people at the scene listen to the music, excluding some people.
Non-competitive is reflected in:
1) Whether or not you have eaten breakfast or purchased a certain item, you can still come to listen to the music.
2) There are multiple stalls playing music at the scene, and people will not refuse to listen to another one just because they have listened to one.
The main profit model of this music stall relies on donations, meaning there is a guitar case placed in front for voluntary donations.
However, this model has significant uncertainty and sustainability.
If the donated money is not enough to make a living, people may not be able to continue making music, and then there will be no more music on this public land.
This is another dimension of the tragedy of the commons, where the lack of good support for valuable public goods damages the entire ecosystem.
Here, we have an assumption that the music is relatively pleasant rather than noise. Music can bring pleasant emotional value to people at the scene, possibly attracting more people to this area or making it easier to make consumption decisions.
Based on this assumption, the stalls near the music stall may have more foot traffic and sales. However, these stalls do not donate to the music stall, which is called free-riding, meaning people tend to take advantage of public resources without contributing.
So far, the concepts of public goods, tragedy of the commons, free-riding, competitiveness, and exclusion have been explained, and it is difficult to have absolute public goods. For example, once you leave this square, you cannot hear this music, so the judgment of public goods is usually based on certain conditions and relative degrees.
How to sustain valuable public goods
How to identify and measure the value of public goods?
First, most people recognize the value of public goods, as everyone can benefit from them without incurring actual costs, making "free-riding" enjoyable. This leads to the first question: How to identify and measure the value of public goods?
For goods, this is very easy to achieve. I spend money to buy a loaf of bread, eat it, and that is a tangible benefit.
But for music, I feel happy after listening to it, how do I measure it in terms of money? This is a major issue for public goods. For example, some publicly accessible papers may be incomprehensible to many people and therefore seem worthless, while some research based on them may lead to the development of new technologies, changing humanity.
So how do you price such a paper? Patents are a way to protect intellectual property, but they also impose restrictions, and legal battles and resources have been consumed around patents, limiting the development of some technologies.
If all research results were completely public goods, would the world be different? This is a topic of research in the decentralized science direction of DeSci.
If a public good has a clear value, things will be easier, such as inviting a band to the scene can increase stall management fees by $1000, so the stall manager can pay $600 to the band to come to this weekend square. But in reality, we cannot measure it, so our discussion below is based on the premise that public goods have value.
How to achieve the sustainability of public goods?
Take this music stall as an example. As a public good, how can it achieve sustainability? Here are several options:
Donations.
If the performance is good and everyone feels happy, they will consider donating. This is the most direct and simple way for public goods, but funds are usually scarce because people like to "free-ride," which is a typical tragedy of the commons.
In the Web3 space, there are solutions such as Gitcoin, GiveETH, JuiceBox, and Donate3 (LXDAO). These optimize the donation process and transparency through blockchain technology.
Learn about Donate3: https://lxdao.io/projects/006
Venue operators pay the costs.
If having music is essential for a market, the operator can support stalls that are difficult to profit from but are necessary by collecting stall fees and profits from other stalls.
This is the current tax mechanism, allocating taxes to infrastructure construction, schools, and education.
New distribution mechanisms
If the output and value of public goods can be quantified — proving that the music stall can increase the turnover of surrounding stalls — then the benefiting stalls should pay a certain fee to the music stall, achieving fair distribution of income.
In Web3, this method is still under research and exploration, but it is expected to achieve fair and effective resource redistribution.
Commercialization
For example, setting up a paid song request service, selling related products, or displaying advertisements at the stall.
Another method is to cooperate with stalls that have commercial profits, sharing some operating costs. For example, at the fruit stall below, the stall owner uses a sound system to attract customers (red box in the image below) and provides the public good of music. The music stall only needs to pay the electricity bill to the cooperating stall.
In the Web3 space, some new funds have been established, promising to invest part of the profit into supporting public goods. This may affect everyone's experience during commercialization, so Vitalik has created the concept of an "evil revenue curve" (to be discussed another day).
Evil revenue curve — https://vitalik.eth.limo/general/2022/10/28/revenue_evil.html
Why We Need to Focus on the Sustainability of Public Goods
Public Goods Are Everywhere
It seems difficult to solve, does the sustainability of public goods have anything to do with me? Or do we really need public goods?
In fact, the issue of public goods is not only happening at weekend markets or in a region or country, but it is everywhere. You may not go to weekend markets, but I believe you go online every day. The internet is full of countless public and non-public goods. Would you be willing to accept an internet like this:
Logging in to any website to view information or download materials requires a subscription fee.
Using almost all software requires payment, and there are not many free software options.
Even if the software and websites are free, they are filled with ads that pop up every time you click.
Commercial companies can exclusively restrict whether I can use their services, even if I am willing to pay. There are no free open-source software alternatives, and commercial companies set sky-high prices.
The reason you can enjoy the current level of free, open, and shared internet is because of the existence of open-source projects and digital public goods.
Open-source contributors and public goods builders deserve appreciation
Why do these open-source contributors and public goods builders deserve appreciation?
It's because they are not afraid of the tragedy of the commons, they are willing to contribute voluntarily, and they don't seek rewards. Just imagine how many people would be willing to come to the weekend market and voluntarily help clean and maintain the public environment for free?
Open-source projects and digital public goods face such great challenges, yet they have still helped create the current open and free internet, thereby accelerating the development and historical progress of all humanity.
In reverse thinking, if we increase our focus, promotion, and support for public goods, and even personally participate in the construction of these public goods, donate a little money, or participate in the development and maintenance of open-source projects, once we solve some sustainability issues and make the sustainability of public goods no less than that of private goods and commercial goods, what kind of world will we create?
What We Are Doing
As one of the co-founders of LXDAO, I have been dedicated to exploring the sustainability of digital public goods and open-source projects over the past two years, and providing related public services.
Web3 technology and philosophy have given me hope for solving these issues. For example, the borderless nature of cryptocurrencies allows for automated programmatic payments, making automated global open-source funding possible; NFTs can solve the issue of digital public goods ownership. The open-source nature of Web3 also gives new voice to digital public goods (especially in the Ethereum ecosystem); the operation mode of DAO naturally fits the collaborative nature of open-source projects, allowing people to remotely and anonymously submit code while receiving funding from the DAO.
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