Existence of an equilibrium with arbitrary tax schemes for financing local public goods

The existence of a public competitive equilibrium for any arbitrary (nondistortive) tax schemes (in particular, proportional taxes) for economies with local public goods, is proved. Allowing preferences to be both nontransitive and noncomplete enables an explicit introduction of the government as an (additional) agent in the economy. Moreover, we allow for “spillovers” of the public goods among localities, and for the production sets to depend on the amount of public goods produced in the economy. The only restriction on the tax system is that every individual is able to afford it and that the government's budget never runs a surplus. Since every equilibrium allocation is a Pareto optimum, every tax scheme is optimal (in the sense that its equilibrium allocation is a Pareto optimum).     

Ethnic diversity, tax limitations and public goods

One strand of research in public economics has found that increasing ethnic diversity leads to reductions in provision of productive public goods. Another strand of research has emphasized the key role that tax and expenditure limitations play in the provision of public services. This paper explores the interaction between these two effects. The regression results suggest that the prior results on ethnic diversity are robust when TELs are taken into consideration. In addition, the imposition of TELs mitigates the negative effect of ethnic fragmentation on the share of local spending on education and roads. It also mitigates the positive correlation between ethnic diversity and total local government revenue and expenditure per capita.     

Distribution of tastes and skills and the provision of local public goods

This paper introduces into the Tiebout model individuals with different skills. It is shown that the production techniques, the distribution of tastes and skills and intercommunity trade will affect the pattern of communities. In the suggested model competition with local public goods is Pareto optimal: communities will not be composed of identical people. The optimal solution requires that every community will tax everybody according to his marginal social cost. A Pareto efficient redistribution policy can be carried out only by a central government using lump-sum taxes. A federal income tax will affect community patterns and therefore is inefficient.     

The theory of public goods: non-nash behaviour

Most treatments of equilibrium public goods provision assume zero conjectural variations in the sense that each individual regards the behaviour of the rest of the community as independent of his own. This paper introduces nonzero conjectural variations into the model. A diagram is introduced which can depict both the individual's and the community's equilibrium in the presence of nonzero conjectural variations. Equilibrium and optimal outcomes are compared, and a specific functional form is used to investigate the effect of community size on the nature of equilibrium. Finally, we discuss the requirement that conjectures should be consistent.     

Migration with local public goods and the gains from changing places

Without public goods and under fairly standard assumptions, in Hammond and Sempere (J Pub Econ Theory, 8: 145–170, 2006) we show that freeing migration enhances the potential Pareto gains from free trade. Here, we present a generalization allowing local public goods subject to congestion. Unlike the standard literature on fiscal externalities, our result relies on fixing both local public goods and congestion levels at their status quo values. This allows constrained efficient and potentially Pareto improving population exchanges regulated only through appropriate residence charges, which can be regarded as Pigouvian congestion taxes.     

Sorting by foot: 'travel‐for' local public goods and equilibrium stratification

Abstract.  We re‐examine Tiebout's hypothesis of endogenous sorting in a competitive spatial equilibrium framework, by considering both income and preference heterogeneity and by allowing agents to decide endogenously the number of visits to a 'travel‐for' local public good. The equilibrium configuration may be completely segregated, incompletely segregated, or completely integrated, depending on relative market rents and income/preference/local tax parameters. A segregated equilibrium may feature endogenous sorting purely by income or by both income and preferences. While the rich need not be closer to the local public facility site, multiple equilibria may arise when the equilibrium configuration is incompletely segregated. JEL classification: D50, H41     

Technology and public goods

This paper presents a theory of public goods based on production theory where public goods are viewed as inputs to the production process. We examine the pure case of public inputs (no private inputs) as well as the mixed case (private and public inputs). We show how the case of public inputs is related to certain forms of nonjoint production, and we characterize it in terms of variable profit and joint cost functions. Comparative statics results are derived graphically in the two-by-two case.     

Public goods and public bads

In many empirically relevant situations agents in different groups are affected by the provision of a public characteristic in divergent ways. Whereas for one group it represents a public good, it is a public bad for another group. Applying Cornes and Hartley's aggregative game approach, we analyze a general model in which such contentious public characteristics are present and are provided cooperatively. In particular, we establish neutrality results with respect to redistribution and growth of income, infer the effects of preference changes and coalition formation, and present a technology paradox. Finally, we compare the outcome of voluntary provision of the contentious public characteristic with the Pareto‐optimal solution, highlighting a potential conflict between equity and efficiency in this case.     

Retailing public goods: The economics of corporate social responsibility

This paper explores the feasibility and desirability of Corporate Social Responsibility (CSR). We identify CSR with creation of public goods or curtailment of public bads. Using a model with profit-maximizing firms, the paper shows that there is a direct parallel between CSR and traditional models of private provision of public goods. Indeed, firms that use CSR will produce public goods at exactly the same level as predicted by the standard voluntary contribution equilibrium for public goods. We compare CSR with government provision and charitable provision, discussing when CSR by private for-profit firms could have a comparative advantage in dealing with public goods provision.     

Measuring the social value of local public goods: an empirical analysis within Paris metropolitan area

A non-linear hedonic model is used to estimate the implicit marginal prices of 17 local public goods in a Paris suburban area on an original data set of some 8200 housing units. The results reveal a robust effect of local public school quality (measured both by the fraction of junior high school students that are at least two years behind grade level and the student/teacher ratio) on house prices. It is observed that housing owners’ marginal willingness to pay for reducing commuting time is roughly similar for public transportation than for car transportation. Another noticeable result is the complete capitalization of local taxes at a discount rate of 3.5%. An illustration of the potential usefulness of the results for Cost–Benefit analysis is also provided.     

公共池塘资源自主治理理论与我国农村社区公共产品治理的研究

埃莉诺·奥斯特罗姆的公共池塘资源自主治理理论完善了准公共产品理论,结合社会资本因素的集体行动及制度供给理论给我们提供了研究农村社区公共产品供给及治理新的视角。基于此,在简要回顾目前国内农村社区公共产品治理研究及其不足之处的基础上,借鉴公共池塘资源自主治理理论,提出今后我国农村社区公共产品治理研究中需要进一步加强研究的内容及方向,以促进农村公共事业的可持续发展。     

Location and ownership of public goods

We introduce location choice for the public good in the property rights framework. We find that it can be optimal to separate location from ownership.     

The political economy of public goods: Some evidence from India

We are interested in how public goods get allocated by a centralized state. We use data on public goods and social structure from parliamentary constituencies in rural India to understand the allocation of these goods over the 1970s and 1980s. National policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure. We find evidence of considerable equalization in many of these facilities, reflecting perhaps the importance of these commitments. Among the historically disadvantaged social groups, those that mobilized themselves politically gained relative to the others. Measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance.     

Group size paradox and public goods

In an economy with voluntarily provided public goods and private product varieties, and a general class of CES preferences, it is shown that aggregate public good contribution follows an inverted-U pattern with respect to group size when private and public goods are substitutable in preferences. With complementarity, however, aggregate provision grows monotonically with group size.     

Intermediate goods and the incidence of the corporation income tax

Intermediate goods are introduced into a general equilibrium model of the incidence of the corporation income tax. Several theoretical conclusions about the role of such goods are established. Many well-known propositions about the incidence of the corporation income tax, emanating from models with only final goods, need to be modified. Estimates from U.S. data suggest that if intermediate goods are left out results will be misleading, especially if these goods are a relatively large sector in the economy and possibilities of substituting capital for labor in their production, and of substituting them for other productive factors in the final-good industries, are rather limited.     

Recognizing contributors: an experiment on public goods

We experimentally investigate the impact of recognizing contributors on public good contributions. We vary recognizing all, highest or lowest contributors. Consistent with previous studies, recognizing all contributors significantly increases contributions relative to the baseline. Recognizing only the highest contributors does not increase contributions compared to not recognizing contributors, while recognizing only the lowest contributors is as effective as recognizing all contributors. These findings support our conjecture that aversion from shame is a more powerful motivator for giving than anticipation of prestige.     

Decentralizing development: Allocating public goods via competition

Decentralizing the allocation of public goods by giving funds directly to communities takes advantage of local information concerning needs, but leaves funds open to misuse or capture by local elites. A large scale development project in Indonesia attempts to overcome this downside of decentralized allocation by having communities compete locally for block grants. Competition weeds out less efficient projects. Increasing the number of villages bidding by 10% leads to a 1.8% decline in road construction costs. Increased community participation in project planning also leads to better outcomes.