Are fireworks in London a public good?

London's New Year's Eve fireworks display is to be limited to a viewing area of 100,000 ticketed spectators for the first time. The event's popularity made it "untenable" to strain the transport and safety infrastructure with a larger number, the Mayor's office says. Hence the decision to charge £10. This poses a question about the nature of public goods.

The provision of public goods is an area said to be vulnerable to market failure. Market economies struggle to allocate resources into these goods because firms can’t make any money out of them. That’s because it’s difficult to stop people from consuming the good (‘non-excludability’). Consumers also feel disinclined to do so because they can’t be said to be using someone else’s share (‘non-rivalry’). That makes consumers unwilling to pay, and so the good cannot be provided without government intervention.

Do you think the London New Year fireworks have the characteristics of a public good?

According to the BBC, the display was first staged at the London Eye in 2003 and attendance grew from 100,000 then, to an estimated 500,000 at last year's event. A spokesman said last year's display had put "enormous strain on transport and safety infrastructure", and after consulting emergency services and Transport for London the event in its current form was found to be "untenable".

1. First question: Is the charging proposal simply designed to deter people from causing big crowd control problems? Perhaps the proposal is primarily a matter of public order. In that case you can dismiss the public goods discussion as an irrelevance.
2. Second question: can people be excluded from enjoying the fireworks? Apparently they can. Barriers have been used to form viewing areas for the fireworks in previous years, but for the first time people will be denied entry to those areas unless they have a ticket. That would suggest fireworks are not a pure public good.
3. Third question: what about rivalry? If I show up, do I reduce what you can see? Apparently the answer here is also yes. The increasing popularity of the evening meant capacity was often being reached by early evening, leaving hundreds of thousands of people unable to get a good view, with even the early arrivals facing a wait of several hours and cramped conditions.

So it’s looking like the answer to the question ‘are the London Fireworks a public good’ is no. If fireworks are not a public good, it makes it harder to defend the idea that taxpayers should be funding an elaborate display. But the leader of the Liberal Democrat London Assembly Group, criticised the charging plans, saying the fireworks "should be accessible to all" and warned of "the potential for serious crowd management issues outside the 'pay' zone". In other words, it might simply be better to have a publicly funded fireworks display.

What do you think?

There are several links to this topic which cropped up last winter during discussions about flood defences.