A Note on the Efficient Pricing of Public Goods

Dwight R. Lee
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Dwight R. Lee: University of Colorado

Public Finance Review, 1978, vol. 6, issue 4, 503-511

Abstract: It has been concluded by some that no positive price for a public good is con-sistent with consumption efficiency as it will discourage consumption that could be provided at zero cost. It is argued here that this conclusion is m error because it fails to distinguish between two distinct components ofpublic good consumption: (1) the quantity of the good made available, and (2) the duration of the use of what is available. By developing a model which explicitly considers these two components of consumption it is shown that a pattern of positive "entry" prices exists which will motivate efficiency in both the consumption and provision of a public good.

Date: 1978
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:6:y:1978:i:4:p:503-511

DOI: 10.1177/109114217800600408

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