Incentive Transfer Schemes with Marketable and Nonmarketable Public Services

Nobuo Akai (), Keizo Mizuno and Hiroshi Osano

Journal of Institutional and Theoretical Economics (JITE), 2010, vol. 166, issue 4, 614-640

Abstract: We examine an incentive transfer scheme in an executive agency system when there are both marketable and nonmarketable public services. We show that because of the incentive transfer scheme, which contributes to the elimination of a government's budget deficit, social welfare is higher in the executive agency system than in a traditional system when the shadow cost of public funds is large. In addition, the scheme is desirable from a welfare viewpoint when the marketable and nonmarketable public services are complements, or when the production technology exhibits a high degree of cost complementarity.

JEL-codes: H11 L32 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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