Skip to main content Accessibility help
×
Home
Hostname: page-component-768dbb666b-jrcft Total loading time: 0.56 Render date: 2023-02-05T23:59:04.731Z Has data issue: true Feature Flags: { "useRatesEcommerce": false } hasContentIssue true

9 - Public goods

Published online by Cambridge University Press:  05 June 2012

Gareth D. Myles
Affiliation:
University of Exeter
Get access

Summary

INTRODUCTION

When a public good is provided, it can be consumed collectively by all households. Such collective consumption violates the assumption of the private nature of the goods in the Arrow–Debreu competitive economy. The existence of public goods then leads to a failure of the competitive equilibrium to be efficient. This implies a potential role for the state in public good provision to overcome the failure of the market.

The formal analysis of public goods began with Samuelson (1954) who derived the rule characterising efficient levels of provision and, after defining some necessary terms, this will also be the starting point of this chapter. Efficient provision will be considered for pure public goods and for public goods subject to congestion. The theme of efficiency is continued into the study of Lindahl equilibria with personalised prices. Following this, the analysis of private provision demonstrates the nature of the outcome when prices are uniform and illustrates why a competitive market fails to attain efficiency.

If government provision is to be justified, it must be shown that the government can improve upon the market outcome. Section 6 shows what can be achieved when policy instruments are restricted to commodity taxation and uniform lump-sum taxes. In seeking the attainment of an efficient outcome, the government is faced with informational constraints of which the lack of knowledge of household preferences is the most significant. Section 7 on mechanism design shows why households may choose to misrepresent their preferences and how mechanisms can be designed to overcome this.

Type
Chapter
Information
Public Economics , pp. 263 - 311
Publisher: Cambridge University Press
Print publication year: 1995

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

  • Public goods
  • Gareth D. Myles, University of Exeter
  • Book: Public Economics
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9781139170949.010
Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

  • Public goods
  • Gareth D. Myles, University of Exeter
  • Book: Public Economics
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9781139170949.010
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Public goods
  • Gareth D. Myles, University of Exeter
  • Book: Public Economics
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9781139170949.010
Available formats
×