Governmental Provision of Public Goods Need Not Crowd Out Private Provision

Hiroki Kondo () and Amihai Glazer
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Hiroki Kondo: Department of Economics, Sophia University

No 151607, Working Papers from University of California-Irvine, Department of Economics

Abstract: Consider the private provision of a public good, where consumption of the public good requires an individual to spend time. We show that gov- ernmental provision of the public good financed by a labor tax reduces the incentive to work, increases the time available to an individual to consume the public good, and so increases the marginal utility to the individual of the public good. That in turn means that, in contrast to standard mod- els, governmental provision need not fully crowd out private provision. Instead, increased governmental provision can lead to an increase in the sum of private and governmental provision.

Keywords: Public goods; Crowding out (search for similar items in EconPapers)
JEL-codes: H23 H42 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2016-04
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:151607

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