Public Providers, versus Private Providers, of Public Goods: A General Equilibrium Study of the Role of the State

George Economides, Apostolis Philippopoulos and Vanghelis Vassilatos ()

No 3487, CESifo Working Paper Series from CESifo

Abstract: This paper studies the difference between public production and public finance of public goods in a dynamic general equilibrium setup. By public finance, we mean that the public good is produced by private providers with the government financing their costs. When the model is calibrated to match fiscal data from the UK economy, the main result is that, ceteris paribus, a switch from public production to public finance can have substantial aggregate and distributional implications. Public providers cannot beat private providers in terms of aggregate efficiency. We finally design a transfer scheme that can make a switch to private provision welfare improving for all agents including public employees.

Keywords: public goods; growth; welfare (search for similar items in EconPapers)
JEL-codes: D60 D90 H40 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3487

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