Should a Non-rival Public Good Always be Provided Centrally?

Nicolas Gravel () and Michel Poitevin

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: This paper discusses the problem of optimal design of a jurisdiction structure from the view point of a utilitarian social planner when individuals with identical utility functions for a non-rival public good and private consumption have private information about their contributive capacities. It shows that the superiority of a centralized provision of a non-rival public good over a federal one does not always hold. Specifically, when differences in individuals' contributive capacities are large, it is better to provide the public good in several distinct jurisdictions rather than to pool these jurisdictions into a single one. In the specific situation where individuals have logarithmic utilities, the paper provides a complete characterization of the optimal jurisdiction structure in the two-type case.

Keywords: federalism; jurisdictions; asymmetric information; equalization; second best; public goods; city mergers (search for similar items in EconPapers)
JEL-codes: D6 H2 H7 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015
New Economics Papers: this item is included in nep-mic and nep-upt
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Related works:
Working Paper: Should a non-rival public good always be provided centrally (2015)
Working Paper: Should a non-rival public good always be provided centrally? (2015)
Working Paper: Should a Non-Rival Public Good Always Be Provided Centrally? (2014)
Working Paper: Should a Non-Rival Public Good Always Be Provided Centrally? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:12-2015

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