This article originally appeared in Regulation. Click here to read the full article.
By Ike Brannon
With the recent announcement of the 2013 winners of the Nobel Prize for economics came the sad news of the passing of Ed Clarke, who likely was on the award’s short-list. While Clarke is virtually unknown to the public—and even many of his fellow economists—he is well-known to the Nobel Committee members, who referenced his path-breaking contribution to the discipline when awarding the prize in previous years.
Clarke conceived of the idea of “revealed demand,” which became a crucial part of the corpus of public choice economics. Put simply, he postulated that many of the perceived market failures that supposedly indicate the need for government provision of some good or service at no fee, with taxpayers at-large financing it, could instead be paid for by consumers who actually benefit from the investment. the implication is that such goods as roads, bridges, tunnels, and airports (and sports stadiums, as this magazine has taken pains to point out) can often be financed by those who use them—and if they can’t be financed that way, then perhaps they shouldn’t be built at all. Clarke’s work also came to have important implications for all manner of government auctions involving such goods as spectrum and oil leases, and later came to be relevant to the ubiquitous internet auctions.