A Utilitarian Approach to the Provision and Pricing of Excludable Public Goods

Martin Hellwig

No 03-36, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: The paper studies utilitarian welfare maximization in a model with an excludable public good where individual preferences are private information. If inequality aversion is large, optimal allocations involve the use of admission fees and exclusion to redistribute resources from people who benefit a lot from the public good to people who benefit little. If inequality aversion is close to zero, optimal admission fees are zero. These results are robust if earning abilities provide an additional source of heterogeneity and income taxation an additional policy instrument.

Pages: 39 pages
Date: 2003-12-10
Note: I am very grateful for helpful comments from Felix Bierbrauer and Peter Norman and for research support from the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 504 at the University of Mannheim.
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Related works:
Journal Article: A utilitarian approach to the provision and pricing of excludable public goods (2005)
Working Paper: A utilitarian approach to the provision and pricing of excludable public goods (2003)
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