ABSTRACT
Policing and highways are frequently cites as "important examples of production of public goods," and it is often contended that "private provision of these public goods will not occur," as in A. Paul Samuelson and D. William Nordhaus. In the case of policing, for example, before English kings began to concentrate and centralize power, individuals had rights to a very important private benefit arising from successful pursuit and prosecution: victims received restitution. A property rights approach actually explains both the historical evolution and modern production of policing and highways better than public goods analysis. This chapter discusses the incentive structure underlying a hypothetical restitution-based legal system with private sector policing. It examines an actual example of such a system: Anglo-Saxon law in England prior to the development of strong kings. The chapter provides an exploration of the incentives leading to the withdrawal of restitution and the development of public policing in England.
