Private fire fighting

See While California Fires Rage, the Rich Hire Private Firefighters: A small but growing number of wealthy people are hiring their own teams by Ethan Varian of The NY Times.

Fire fighting is often seen as being a "public good." A definition and discussion of that is given after excerpts from the article. If your local fire department is going to put out fires, it will do that for everyone. We can all get protected. If someone did not pay their bill, the FD would still have to come if their house was on fire and put it out so it does not spread to anyone else's.

So how could private fire fighting exist? Here are some excerpts from the article:

"Don Holter is an owner of Mt. Adams Wildfire, a private contractor in the Sierra Nevada foothills near Sacramento. Most of his business comes from contracts with federal agencies, but his company is one of only five private firms in California that he knows of that work directly for homeowners."

"Mt. Adams Wildfire offers short-term “on call” wildfire protection for families and neighborhood associations in Northern California and Eastern Washington. Last year, the company was on call for close to 90 days, Mr. Holter said. The service can cost up to $3,000 a day.

The majority of private fire crews work for insurance companies like Chubb, USAA and Safeco, which often provide fire mitigation services to their policyholders in high-risk fire areas without extra charge.

But most insurance-contracted crews don’t actually fight the flames. They focus on making homes more fireproof by installing sprinkler systems, fire breaks and fire-blocking gels.

Firefighters with Mt. Adams Wildfire will battle wildfires threatening homes, Mr. Holter said, on the phone from a job in South Lake Tahoe."

"Private firefighting isn’t new. In the United States, government agencies including the National Forest Service have contracted with private crews to fight and prevent wildfires since at least the 1980s. 

What has changed is that contractors are beginning to hire out their services to homeowners directly, as well. It follows that some security firms see a new business opportunity.

Chris Dunn is the founder of Covered 6, a private security firm outside Los Angeles that contracts with homeowners in nearby Malibu and Hidden Hills. He said he is planning to cross-train his security guards to fight fires and hopes to offer a subscription-based fire protection service by next summer."

Public Goods have two additional properties:

1. Non-rivalrous consumption-If one person gets to consume the public good, it does not prevent another person from consuming the public good (unlike private goods where only one person can get it-If I eat a Big Mac no one else can eat that particular Big Mac). If I am protected by the government produced national defense, it does not prevent you from being protected.

2. High Exclusion Costs-It will be very costly, if not impossible, to stop or exclude any U.S. citizen from being protected from foreign invasion. If one person is protected, everyone is protected. If a private company tried to protect the USA, and I did not pay my bill, they could not say “we won’t protect you” since they won’t let any invaders in in the first place. Private goods, in contrast, have low exclusion costs. McDonalds can easily stop you from getting a Big Mac if  you don’t pay.

Because of the High Exclusion Costs, people will become Free Riders.

Free Riders -People who benefit from a good without paying the cost (like people who watch public TV without making a donation).

Since you can’t exclude non-payers due to the High Exclusion Costs, people will become Free Riders and not pay. With no one paying, a private company would go out of business.

So if something beneficial like defense is going to be produced, the government needs to do it and force people to pay for it through taxes.


For these private fire fighters, it seems like they can exclude non-payers pretty easily. They just don't do the consulting services or show up to put the fire out if you don't pay (although your neighbors might benefit if they put your house's fire out since it won't spread).

Is there rivalrous consumption? It seems like it. If the company is putting out a fire or helping you fireproof your house, they can't be doing somewhere else.

There may be some gray areas when it comes to public goods. Take highways, example. Maybe there is non-rivalrous consumption most of the time. But in rush hour, there is. So it might only be a public good some of the time.

In education, it is easy to exclude a student if they don't pay. But if we all benefit from an educated citizenry, then you can't exclude anyone from getting the benefits. So that would make it a public good in some cases.