Public Policy and the Private Provision of Public Goods under Heterogeneous Preferences

Mark Jacobsen, Jacob LaRiviere and Michael Price

Journal of the Association of Environmental and Resource Economists, 2017, vol. 4, issue 1, 243 - 280

Abstract: We compare the relative efficiency of second-best policies designed to promote the private provision of public goods. We use the provision of local public goods as our central example and discuss settings in which the model extends to choices over energy-consuming durables. We introduce preference heterogeneity by allowing a subset of agents to value the public good more than others, reflecting a form of prosocial preference. We further assume that agents face convex costs of provision, an assumption that accords well with individually provided public goods such as neighborhood amenities. We show that minimum standards are often more efficient than uniform price-based incentives in this setting. Extending our model to allow for both benefit and cost heterogeneity, we show how policy choice depends on the strength and correlation between the two forms of heterogeneity.

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://dx.doi.org/10.1086/689834 (application/pdf)
http://dx.doi.org/10.1086/689834 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jaerec:doi:10.1086/689834

Access Statistics for this article

More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().