$$\lambda $$ λ envy-free pricing for impure public good

Takuya Obara (), Shuichi Tsugawa () and Shunsuke Managi
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Takuya Obara: Tohoku Gakuin University
Shuichi Tsugawa: Okinawa University

Economic Theory Bulletin, 2021, vol. 9, issue 1, No 3, 25 pages

Abstract: Abstract In this paper, we examine the provision and pricing of an excludable public good with congestion under lump-sum tax/transfer, constrained by the reduction of envy. We adopt the $$\lambda $$ λ envy-free constraint as a weaker equity concept of no-envy and characterize the optimal public sector pricing rule depending on envy reduction concerns, which is different from the pricing rule contingent on utilitarian distributive concerns. We find that the two fairness concerns are countervailing with regard to the surcharge fee.

Keywords: Public sector pricing; $$\lambda $$ λ envy-free; Public good; Excludability; Congestion (search for similar items in EconPapers)
JEL-codes: D61 D63 H21 H41 H44 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s40505-020-00191-8

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