Chapter 6 discusses the treatment of common/public goods and presents alternative frameworks for dealing with their inefficiencies. The chapter describes four different scenarios for efficient management of public goods and services:

1. The utopian community with perfect information and zero transaction costs.
2. The imperfect community with imperfect information and positive transaction costs.
3. The entrepreneurial club with contractual collective action.
4. Government supply.

The utopian scenario almost never exists because this type of perfect market ignores transaction costs and requires actors that are always dedicated to community values. Each agent has perfect information, both of their own and of their neighbors willingness to pay. In this scenario, agents are collectively able to purchase more than they would on their own.

In the imperfect community, transaction costs will lead to second best outcomes, including non-provision, under-provision, and over-provision. A n on-provision outcome is a decision paralyzed by a prisoners dilemma scenario. An under-provision outcome is a mutually beneficial relationship between a limited number of households, where gains from trade between them leaves the good under-supplied to the community at large. An o ver-provision outcome occurs through voting and more informal non-price decision making.

The entrepreneurial club emerges when a third party is needed to provide goods on the basis of contractual agreements and fees. This firm functions to pool property rights and requires a source of investment and capital, management, a constitution, and membership. Webster and Lai have preconditions for efficient provision of goods via clubs: the ability to exclude others; the technology to measure, price and control access to the good; and an effective decision making apparatus.

Government supply is the ultimate provision club, because it taxes all members of society. Local governments, however, face the problem of imperfect information, since it is difficult to measure demand from such a large population. Local governments also face constraints on borrowing, thus limiting the expansion of a service, possibly leading to congestion of its consumption.