Copied from PublicGoodsProblems
... the perenial light-house example. All ships passing the lighthouse will see the light. So although someone who funds a light-house to protect their ships, gains from it; they don't get a competitive advantage over anyone else. So the incentive is much reduced.
DanielDavies is very good on lighthouses, here ((Scroll http://d-squareddigest.blogspot.com/20021222d-squareddigestarchive.html) (Scroll) to the bottom of the page)