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The Role of Prices on Excludable Public Goods

Sören Blomquist and Vidar Christiansen ()
Additional contact information
Vidar Christiansen: Department of Economics, Postal: University of Oslo, P.O. Box 1095 Blindern, N-0317 Oslo, Norway,

No 2001:14, Working Paper Series from Uppsala University, Department of Economics

Abstract: When a public good is excludable it is possible to charge individuals for using the good. We study the role of prices on excludable public goods within an extension of the Stern-Stiglitz version of the Mirrlees optimal income tax model. Our discussion includes both the case where the public good is a final consumer good and the case where it is an intermediate good. We demonstrate that for a public consumer good charging a positive price may be desirable, but only under certain conditions. However, charging a lower than optimal price may be less efficient than setting a zero price. Conditions are identified under which consumers should be rationed in their demand rather than adjusting demand to price. We also conclude that producers using an intermediate public good as an input should not be charged a positive price.

Keywords: excludable public goods; public sector pricing; information constrained Pareto efficiency (search for similar items in EconPapers)
JEL-codes: H21 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic, nep-pbe and nep-pub
Date: 2001-08-15
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Published in International Tax and Public Finance, 2005, pages 61-79.

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Journal Article: The Role of Prices for Excludable Public Goods (2005) Downloads
Working Paper: The Role of Prices on Excludable Public Goods (2001) Downloads
Working Paper: The Role of Prices on Excludable Public Goods (2001)
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