A Note on ‘Neutrality Theorem' In Private Provision of Pure Public Good

Tilak Sanyal ()
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Tilak Sanyal: Shibpur Dinobundhoo College

Economics Bulletin, 2019, vol. 39, issue 4, 2476-2483

Abstract: In case of private provision of single pure public good, Warr (1983) claimed that if the set of contributors is not singleton then the amount of public good provided in the economy depends on the aggregate income of the contributors. Hence income redistribution among the contributors leaving the set of contributors and their aggregate income unchanged has no effect on the amount of public good. In this note we characterize an income transfer scheme which although affects the gross aggregate income of the contributors, but is still neutral in effect on the amount of public good. Thus we conclude that gross income invariance property of an income redistribution scheme is not necessary for the ‘Neutrality' result. Further we also observe that such kind of transfer directed from contributors to the non-contributors is still neutral over the level of public good, provided it does not alter the set of contributors.

Keywords: public goods; inequality; income distribution (search for similar items in EconPapers)
JEL-codes: H8 (search for similar items in EconPapers)
Date: 2019-11-03
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