Wednesday, January 23, 2008

The Modern Lighthouse

A classic example of a public good is a lighthouse (even though, as Coase famously noted, it can sometimes be provided as a private good). Because any ship captain can freely see a lighthouse and navigate by it, there are positive externalities to the provision of this good.

A reader points out that the new iPhone takes advantage of the modern equivalent of this externality:

"Every Wi-Fi access point, whether public or private, sends out a signal every second or so, like a lighthouse. We pick up those signals and use our technology to calculate your exact location."

What Skyhook does not do, Skyhook Vice President Shean says, is connect to those Wi-Fi networks. "We're detecting, not connecting."