Toward an efficiency rationale for the public provision of private goods

Hanming Fang and Peter Norman ()

Economic Theory, 2014, vol. 56, issue 2, 375-408

Abstract: Public provision of a private goods is justified on efficiency grounds in a model with no redistributive preferences. A government’s involvement in the provision of a private good generates information about preferences that facilitates more efficient revenue extraction for the provision of public goods. Public provision of the private good improves economic efficiency under a condition that is always fulfilled under independence and satisfied for an open set of joint distributions. The efficiency gains require that consumers cannot arbitrage the publicly provided private good, so our analysis applies to private goods where it is easy to keep track of the ultimate user, such as schooling and health care, but not to easily tradable consumer goods. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Publicly provided private goods; Constrained efficiency; Optimal taxation; D61; D82; H42 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Toward an Efficiency Rationale for the Public Provision of Private Goods (2010)
Working Paper: Toward an Efficiency Rationale for the Public Provision of Private Goods (2008)
Working Paper: Toward an Efficiency Rationale for the Public Provision of Private Goods (2008)
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DOI: 10.1007/s00199-013-0790-y

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