We investigate how lighthouses were provided in premodern Japan, with a specific focus on the role of the private sector. Using national survey data on lighthouses collected by the government in 1883, we find that lighthouses constructed by the private sector in the Edo period (1603−1868) accounted for nearly 70% of lighthouses existing at the time of the survey and that there was no significant difference in technical features between private and public lighthouses. However, we observe that almost all private lighthouses were located at ports, and additional case studies indicate that the public authorities endorsed the operation of some lighthouses, which might have contributed to their profits and improved their long‐term survival. We also find that various factors, including the formation of merchant coalitions and whether users were identifiable, influenced whether a private organization could circumvent the free rider problem. (JEL H41, L97, N45)