Adam Smith and Musgrave’s concept of merit good

In this paper I claim that Adam Smith distinguished between economic activities without labeling these distinctions; and, that those distinctions correspond with the modern concepts of private, public and merit good. Musgrave introduced the concept of merit good, but he himself (and several commentators) limited the applicability of the concept merit good. I argue that a close reading of Adam Smith solidifies the distinction conceptualized by the modern ideas of public and merit good; gives the concept merit good a broader domain of applicability; and makes of the ideas of public and merit good concepts which are ideal concepts, and can therefore be applicable jointly and in degrees to particular economic activities.