Pareto improving interventions in a general equilibrium model with private provision of public goods
Antonio Villanacci () and
Ünal Zenginobuz ()
MPRA Paper from University Library of Munich, Germany
Most of the literature on government intervention in models of voluntary public goods supply focuses on interventions that increase the total level of a public good, which is considered to be typically underprovided. However, an intervention that is successful in increasing the public good level need not benefit everyone. In this paper we take a direct approach to welfare properties of voluntary provision equilibria in a full blown general equilibrium model with public goods and study interventions that have the goal of Pareto improving on the voluntary provision outcome. Towards this end, we study a model with many private goods and nonlinear production technology for the public good, and hence allow for relative price effects to serve as a powerful channel of intervention. In this setup we show that Pareto improving interventions generally do exist. In particular, direct government provision financed by “small”, or “local”, lump-sum taxes can be used generically to Pareto improve upon the voluntary provision outcome.
Keywords: general equilibrium; private provision of public goods; Pareto improving interventions (search for similar items in EconPapers)
JEL-codes: D51 H41 (search for similar items in EconPapers)
Date: 2004-12-15, Revised 2006-06-07
New Economics Papers: this item is included in nep-mic and nep-pbe
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Journal Article: Pareto improving interventions in a general equilibrium model with private provision of public goods (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:183
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