Local public goods and private suppliers: Musical suburbs replayed

This paper deals with the existence of private market suppliers in a standard local public goods model. The result of this modification can be a cycling process instigated by rich households rather than poor households. The theoretical model provides empirical implications for capitalization studies and policy implications for the provision and financing of local public goods including education.     

Stackelberg leadership and transfers in private provision of public goods

We consider transfers in a Stackelberg game of private provision of a public good. It turns out that the agent who is the follower in the process of making voluntary contributions to a public good may have an incentive to make monetary transfers to the Stackelberg leader even in a situation where neither has a comparative advantage in making contributions to the public good. The Stackelberg leader is willing to accept such transfers if the actual contribution game is fully non-cooperative because the transfer generates a Pareto superior outcome. If the contributions in the Stackelberg equilibrium is the threat point of a possible cooperative Nash bargaining game, the Stackelberg leader will refuse to accept the transfer if she can. Received: 30 June 1995 / Accepted: 18 February 1997     

Taxation in an economy with private provision of public goods

This paper analyses the effects of taxation and subsidies in an economy with private provision of a public good. It is shown that in a situation where all individuals contribute, taxation affects the equilibrium allocation if and only if at least one individual's voluntary contribution to the public good has an impact on the aggregate tax payments of the others. We then consider linear nonneutral tax-subsidy schemes and analyse efficiency and uniqueness of the resulting Nash equilibria. We show that an efficient Nash equilibrium, where all individuals contribute, will in general not be unique, and establish a non-uniformity property which a tax-subsidy scheme must fulfil in order to induce a unique interior equilibrium that is efficient. Throughout the paper it is assumed that individuals fully understand and take into account the government's budget constraint. Received: 3 November 1997 / Accepted: 23 March 1999     

Differentiable strategy-proof mechanisms for private and public goods in domains that are not necessarily large or quasi-linear

In this paper, we develop a differentiable approach to deal with incentives in a, possibly small, subset of a general domain of preferences in economies with one public and one private good. We show that, for two agents, there is no mechanism which is efficient, strategy-proof and where consumption of both goods is positive for all agents. For the case of two or more agents the same result occurs when nondictatorship is replaced by Individual Rationality. We are very grateful to Atila Abdulkadiroglu, Carmen Beviá, Xavier Calsamiglia, Marco Celentani, Bernardo Moreno, Antonio Romero-Medina, William Thomson, Walter Trockel, an associate editor, three anonymous referees and participants at seminars at Universities of Alicante, Autónoma de Barcelona and Rochester and the Spanish Economic Association meeting in Sevilla for very helpful comments and suggestions.     

Voice,exit and local capture in public provision of private goods

We developed a simple model on publicly provided private goods, such as health or education that highlights a vicious cycle faced by many developing countries. When public services are not of high quality due to mismanagement or corruption, the wealthy may switch to private alternatives. Their exit weakens the influence of citizen voice over politicians, since that leaves the poor as the only constituent with a stake in good governance. As the civic control over local governments weakens, government’s concern for social welfare declines even further, leading to more corruption and more corrosion in the quality of public services. Our model shows that establishing institutions (such as local taxation) that spread the costs and benefits of governance across the whole society is crucial for the success of local governments. Empirical results from the Philippines support this hypothesis.     

Pareto improving interventions in a general equilibrium model with private provision of public goods

Most of the literature on government intervention in models of voluntary public goods supply focuses on interventions that increase the total level of a public good, which is considered to be typically underprovided. However, an intervention that is successful in increasing the public good level need not benefit everyone. In this paper we take a direct approach to welfare properties of voluntary provision equilibria in a full blown general equilibrium model with public goods and study interventions that have the goal of Pareto improving on the voluntary provision outcome. Towards this end, we study a model with many private goods and non-linear production technology for the public good, and hence allow for relative price effects to serve as a powerful channel of intervention. In this setup we show that Pareto improving interventions generally do exist. In particular, direct government provision financed by “small” , or “local” , lump-sum taxes can be used generically to Pareto improve upon the voluntary provision outcome.     

Empathy from private or public self-consciousness in socially responsible consumption

The issue of socially responsible consumption (SRC) has been discussed from a perspective of behavioral change. Empathy is a moral emotion to motivate this behavioral change and includes cognitive and affective elements. Yet, the process of how an individual generates empathy cognitively and affectively is still unclear. Therefore, the main aim of this research is to discuss two types of self-consciousness which result in empathic concern that changes consumers' behavior to be more socially responsible. This research conducted two studies via Amazon Mechanical Turk including the self-evaluation surveys of 428 participants and surveys of 351 participants about a simulated shopping scenario. Structural equation modeling method was employed to examine the hypotheses. Two studies showed that private self-consciousness significantly influences empathic concern about SRC. Moreover, age and income significantly moderated the relationship between private (vs. public) self-consciousness and empathic concern. These findings suggest that experiential marketing strategies could be used particularly on younger or lower-income consumers as they tend to feel empathy through private self-consciousness of moral values on helping others. This research also suggests that nonprofit organizations should collaborate with for-profit sectors by triggering consumers' empathic feelings in terms of private and public self-consciousness and demographic factors.     

Equilibrium participation in public goods allocations

We consider a notion of voluntary participation for mechanism design in public goods economies in which mechanisms select public goods allocations and individuals then choose whether or not to submit their requested transfer to the central planner. The set of allocations that are robust to non-participation is shown to be sub-optimal in a wide variety of environments and may shrink to the endowment as the economy is replicated. When agents become small as the economy becomes large, any non-trivial mechanism suffers from non-participation when agents cannot be coerced to contribute.     

Local public goods as indivisible commodities

A sharper version of Ellickson's (1979) result on the existence of an approximate Tichout equilibrium is shown to be true under much weaker assumptions. It is also shown that there exists a second-best policy regarding the bundle of public goods each local government offers to a resident. The existence result can also be seen as an extension of a result of Anderson, Khan and Rashid (1982) to economies with production. In this context, the main technical difficulty in that the approximate equilibrium allocation does not lie in the attainable and standard techniques of truncation are not adequate.     

To what extent are public savings offset by private savings in the OECD?

The substitutability of private and public savings has implications for the effectiveness of fiscal policy. Using annual data for the period 1970–2004, this study re-examines long-run relationships between OECD private and public savings rates. However, unlike previous work, panel data unit root and cointegration tests are employed. The results confirm substitutability where strong Ricardian Equivalence is rejected for the entire OECD panel. There is support for weak Ricardian Equivalence with less than perfect substitutability. Indeed, it is argued that existing studies most likely overstate the extent of long-run substitutability particularly with regard to EU countries. I am very grateful for the helpful comments provided by the Editor and an anonymous referee. Any remaining errors are my own.     

Local public goods and average cost pricing

Existence of a compensated Tiebout equilibrium is proved for an economy with a measure space of consumers. This result is then extended to show the existence of equilibrium for an economy with natural monopolies and contestable markets.     

Centralized and decentralized provision of public goods

We model the trade-off between centralized and decentralized decision making on the provision of local public goods. Decisions are influenced by spillover effects and differences in jurisdictional size. Centralized decisions are made in a legislature of locally elected representatives, and this creates a conflict of interest between citizens in different jurisdictions. The legislature can be self-interested or benevolent and this can result in either efficient, excessive, or misallocative provision of public goods. The form of centralized decision making has a significant influence on the incentives for centralizing decision making.     

Central government subsidies to local public goods

We examine the welfare effects of a central government's subsidy for a local public good in a Nash equilibrium model with two types of public goods. We first show that the welfare effect depends on the substitution and evaluation effects. We also investigate the optimal subsidy rate in a second-best framework and explore how the optimal subsidy scheme depends on the relative evaluation of the two types of public goods. Received: August 20, 1998/accepted: February 12, 2002 RID="*" ID="*" We are grateful to John Quigley, Minoru Kunisaki, Tom Panella, Andy Haughwout, Steven Craig, William Hoyt, Michael Ash, Konrad Stahl, Amihai Glazer, David Wildasin and two referees for helpful comments and suggestions, An early version of this paper was presented at a seminar at University of California, Berkeley and at conferences at JAEE Annual Meeting in Japan, North American Meetings of The RSAI in Washington, WSAI conference in Hawaii, Public Choice Meeting in San Francisco.     

Local public goods, property values, and local public choice

This paper examines the relationship between the benefits and costs of local public good provision and local property values within the context of the Koopmans-Beckmann-Gale location-assignment model. Property values do not in general measure accurately the marginal net benefits of local public goods; special conditions sufficient for property values to measure or bound the marginal net benefits are stated, however. In addition, it is shown that under certain circumstances, households vote for property-value-enhancing levels of local expenditures. Under these conditions, a political equilibrium produces a Lindahl solution to the local public good problem.     

卖得好才是硬道理

20年前,中关村有一句流行语叫做 "卖出去才是硬道理"。20年后,这句话 已有些过时了,因为,仅仅是卖出去还不 够,卖得好才是硬道理。 卖得好,包括利润率是否高?产品有 无科技含量?销售质量如何?品牌的社会 形象等无形资产是否有得到良性成长?有 无长期赢利能力等等。     

Congestable local public goods in an urban setting

In this paper, we recognize two types of unpure local public goods (LPGs): congestable and pollutable. This paper and the forthcoming one (Clubs in an urban setting, mimeo, 1980) are devoted to congestable LPGs (CLPG). In Part I we define, classify, and characterize CLPGs. CLPGs may vary in their degree of congestability between zero, in the case of a pure LPG, and one, in the case of a private good. Spatially, we recognize two types of LPGs: the dispersed LPG (DiLPG) and the concentrated LPG (CoLPG). The first is distributed throughout the residential ring and the second is provided in specific locations to which households must travel. The second part of this paper is devoted to the investigation of the properties of a CDiLPG in an urban setting. The properties of CoLPG are investigated in (Clubs in an urban setting, mimeo, 1980). A version of Samuelson's rule as to the optimal allocation of pure public goods is extended on one hand to local dispersed public goods and on the other hand to CLPGs. Two corrective Pigouvian taxes are identified: congestion tolls levied on households, and a residential land tax. These two taxes cover total government expenditure on the LPG. The fraction of the expenses on the LPG covered by congestion tolls is α, and that covered by land taxes is (1 − α), where α is the degree of congestability. Efficiency can also be achieved by zoning the residential ring and regulating the housing density in it. This procedure may replace taxation and its advantage is that we can control a large number of externalities by a single set of zoning rules and regulations. An a posteriori rule to guide the local government as to the desirability of its actions is provided.     

The system of towns with spatial public goods

In this paper, we introduce a model of ‘spatial public goods’, whose provision costs depend on the size of the benefit area. It is assumed that there are many developers providing spatial public goods in their towns. Each developer chooses the area size of his/her town and the quality of its spatial public good so as to maximize profit, taking the market price system as given. Each consumer chooses the level of the public good, and hence the town that supplies it, so as to maximize his/her utility. We show that the competitive equilibrium allocation of this economy is efficient.     

Efficient provision of public goods with endogenous redistribution

We study a balanced mechanism that is capable of implementing in Nash equilibrium all the Pareto-efficient individually rational allocations for an economy with public goods. The Government chooses a set of weights directly related to the Lindahl prices corresponding to the Pareto-efficient allocation to be implemented. The mechanism then guarantees that initial endowments are re-allocated so that the chosen vector of Lindahl prices is indeed a Lindahl equilibrium, and implements the corresponding Lindahl allocation. Finally, besides being balanced, our mechanism is simple. Each agent has to declare a desired increase in the amount of public good, and a vector of redistributive transfers of initial endowments (across other agents).Received: 9 May 2003, Accepted: 22 October 2003, JEL Classification: C79, H21, H30, H41We wish to thank Jeremy Edwards, Andrew Postlewaite and Emanuela Sciubba for helpful comments. Of course, any remaining errors are our own.     

Retail market structure and the threat by the manufacturer to sell goods directly to the consumer

When a manufacturer and its retailers and consumers are spatially separated, the retailers’ market size may be limited by the manufacturer who provides consumers with an option to purchase goods directly from them. The manufacturer uses this tactic to increase profit when a few retailers dominate the market. The mill price of a manufacturer, that is, the price of the good at delivery from a manufacturer’s factory, is critical under these circumstances.If the manufacturer charges a franchise fee, thus absorbing the retailer’s profit, this fee is a function of the mill price. Mill price policy can be used to maximize profit on the sale of goods and collection of the franchise fee. The resulting retail market structure becomes preferable for the manufacturer and consumers since the manufacturer’s profit is larger, as is the quantity purchased, compared with a competitive equilibrium in which every firm entering the market area is assumed to move its location instantly without cost.     

Effects of an anticipated expansion in international public goods on public capital accumulation

This paper presents a generic model to include public capital accumulation and the services of international public goods provided by a neighbor country. It examines the long-run and short-run responses of private and public capital accumulation in the home country to an anticipated increase in international public goods. It is found that the home economy in effect cuts its public capital stock, but keeps an unchanged private capital stock in the long run when a neighbor commits itself to expanding the stock of public goods in the future. The key factor determining the short-run responses of the home country is the extent to which it will match its government spending with a neighbor country's policy, which is associated with the relative difference between the marginal utility of consumption and that of home public capital affected by an increase in international public goods.