Impure Public Goods Research Articles

Steigende Staatsquote oder schwarze Null – ein theoretischer Erklärungsansatz durch öffentliche Güter

Abstract The German national deficit reached an unprecedented magnitude following the COVID-19 pandemic. Consequently, determining an appropriate or correct public sector share has become the subject of extensive discourse. A crucial theoretical explanatory approach for the increasing intervention of the state is the theory of public goods. This article elucidates why markets are unsuitable for the production of certain goods, commonly referred to as public goods. Furthermore, the article demonstrates, through the elucidation of impure public goods, that the state undertakes tasks that could be handled by the market itself. Therefore, it is essential to question why the state produces specific goods, particularly in light of Germany’s saving goals.

Knowledge mobility after tourism entrepreneurial failure: Life after death?

There has been limited conceptualization in tourism of the knowledge consequences of firm failure despite overall high failure rates. There is no simple dichotomy between the lost knowledge of failed firms and knowledge survival in successful firms. This paper therefore elaborates a three-stage conceptual model of the post-failure trajectories of knowledge. The model focusses on the distinctive combination of tacit and codified knowledge in context of impure public goods, their distribution within and beyond the firm, and their micro and macro determinants. Three main post-failure trajectories are identified: cold storage/black hole of knowledge, knowledge recovery, and knowledge recombination. A research agenda is outlined for this neglected aspect of tourism knowledge research which has significant implications for innovation.

The purity of impure public goods

AbstractIn this paper, we provide a new perspective on the links between the analysis of the voluntary provision of pure and impure public goods. In particular, it is shown that the impure public good model can be transformed into a pure public good one. This innovative method not only leads to new comparative statics results, but also provides new insights on the impure public good model, for example, on causes of the nonneutrality of income transfers with regard to Nash equilibria in the impure public good case.

Climate change-induced livelihood adaptive strategies and perceptions of forest-dependent communities: The case of Inanda, KwaZulu-Natal, South Africa

Many South African rural communities depend directly or indirectly on natural forests to meet their livelihoods. Climate change can alter many of the mutual relationships between rural communities and natural resources (forests) by posing a variety of new challenges to these resources, agriculture, biodiversity, rural livelihoods and food (in) security. This study aimed to assess how forest-dependent rural communities perceive climate change and how that perception and other socio-economic factors affect their adaptation. In doing so, it identifies the barriers and enablers to adaptation in response to changes in the community forest status that threaten their livelihoods. The study employed a multinomial logit (MNL) model to analyse how socio-economic and institutional factors influence their choices among the alternative livelihood strategies. The study reveals that factors such as the capacity of community forests to support rural community livelihoods, awareness of community members about the change in temperature and rainfall, and the trend in the availability of natural forest products play important roles in enhancing adaptation capabilities. In addition, households with better knowledge about the trend in temperature and rainfall and also those endowed with human capital are less likely to create pressure on natural forests. Taking forests and their services as impure public goods, the study recommends the need for public-private partnerships (between local municipalities/government and/or non-government entities and the private sector) to invest in building institutions that improve community forest governance, capacity empowerment on collective management of common-pool resources, and creating employment and livelihood opportunities to forest-dependent rural communities.

Funding Public Goods through Dedicated Taxes on Private Goods

We examine dedicated taxes (i.e., taxes on private goods used to finance public good provision) in a game-theoretic model of impure public goods. We show that a dedicated tax can increase or decrease demand for the taxed good. The optimal dedicated tax generally cannot achieve the Pareto-optimal allocation, but it can generate a conditionally efficient equilibrium with comparatively more or less public good provision, depending in part on complementarity or substitutability between the private and public good. We also demonstrate a neutrality result: when individuals can make direct donations, sufficiently low dedicated taxes will not impact equilibrium allocation.

The Purity of Impure Public Goods

In this paper we demonstrate how the impure public good model can be converted into a pure public good model with satiation of private consumption, which can be handled more easily, by using a variation of the aggregative game approach as devised by Cornes and Hartley (2007). We point out the conditions for impure public good utility functions that allow for this conversion through which the analysis of Nash equilibria can be conducted in a unified way for the impure and the pure public good model and which facilitates comparative statics analysis for impure public goods. Our approach also offers new insights on the determinants for becoming a contributor to the public good in the impure case as well as on the non-neutral effects of income transfers on Nash equilibria when the public good is impure.

Revisiting the impact of impure public goods on consumers’ prosocial behavior: A lab experiment in Shanghai

AbstractIn this study, we implemented a dictator game experiment to examine how the increase of the public characteristic in an impure public good affects individuals’ prosocial behaviour. A within‐subject design was used in the experiment. The dictator game was repeated six times with an impure public good introduced in four of them. We observe that the increase of the public characteristic in an impure public good partly crowds out individuals’ subsequent donations, which could be explained by a seemingly ‘mental accounting’ mental process. In addition, we also find that the selfish behaviour of individuals in dictator games with impure public goods, to some extent, has an inertia influence on their subsequent donations when the impure public good is removed.

On the Provision of Excludable Public Goods - General Taxes or User Prices?

This paper compares some of the most common and debated ways of financing the provision of impure public goods/services in a unified dynamic general equilibrium framework. We study and rank a wide variety of ways ranging from provision without any user charges, to provision with full user charges; we also study mixed systems. In our quest for the best system, we address both efficiency and distribution issues. The focus is on the effects of user prices on individual incentives and choices. We identify circumstances under which a market system of user prices not only enhances aggregate efficiency but is also Pareto improving meaning that makes all types of income groups better off. But we also provide examples of circumstances under which user prices on impure public goods do not make sense.

The Social Determinants of Choice Quality: Evidence from Health Insurance in the Netherlands

Market provision of impure public goods such as insurance retirement savings and education is common and growing as policy makers seek to offer more choice and gain efficiencies. This approach induces an important trade-off between improved surplus from matching individuals to products and misallocation due to well documented choice errors in these markets. We study this trade-off in the health insurance market in the Netherlands, with a specific focus on misallocation and inequality. We characterize choice quality as a function of predicted health risk and leverage rich administrative data to study how it depends on individual human capital, socioeconomic status and social and information networks. We find that choice quality is low on average, with many people foregoing options that deliver substantive value. We also find a strong choice quality gradient with respect to key socioeconomic variables. Individuals with higher education levels and more analytic degrees or professions make markedly better decisions. Social influence on choices further increases inequality in decision making. Using panel variation in exposure to peers we find strong within firm, location and family impacts on choice quality. Finally, we use our estimates to model the consumer surplus effects of different counterfactual scenarios. While smart default policies could improve welfare substantially, including the choice of a high-deductible option delivers little welfare gain, especially for low-income individuals who make lower quality choices and are in worse health. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

RANK‐ORDER COMPETITION IN THE VOLUNTARY PROVISION OF IMPURE PUBLIC GOODS

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free‐riding in impure public goods. In our Rank‐Order Voluntary Contribution Mechanism (Rank‐Order‐VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment, Rank‐Order‐VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing. (JELC91, H41)

Envy-Free Pricing for Impure Public Good

In this paper, we study optimal public good provision with congestion and user fees to exclude some agents under lump-sum tax/transfer, constrained by the condition of reduction of envy. We adopt the λ envy-free constraint proposed by Diamantaras and Thomson(1990), and employ the exclusion technique used in Hellwig(2005), i.e., the policymaker decides the level of provision and user fee paid by people accessing a public good, as well as a uniform level of tax/transfer. We characterize the optimal public sector pricing rule that depends on utilitarian distributive concerns and envy reduction concerns, which are in conflict with each other. We show that if the social welfare function is strictly increasing and strictly concave and the government is not concerned with reducing envy, the user fee is greater than the marginal congestion cost. Additionally, we show that if the government reflects the notion of equality of opportunity under the reduction of envy, the user fee is lower than the marginal congestion cost. These results imply that the two fairness concerns are countervailing with regard to the surcharge fee. Furthermore, by numerical computation, we observe that both provision level of the public good and its user fee decrease as the intensity of envy increases under the binding ethical constraint.

Funding Global Environmental Public Goods Through Multilateral Financial Mechanisms

Multilateral financial mechanisms (MFMs) are becoming increasingly prevalent as a means for addressing global public good problems. MFMs raise funds from member countries through “burden sharing” arrangements, and these funds are disbursed as grants to finance environmental projects around the world. These projects are impure public goods, as they help achieve global (public) objectives like climate change mitigation, and they also generate local (private) benefits for recipient countries. This paper constructs a model of MFMs and explores how impure public goods influence burden sharing arrangements. I design an optimal burden sharing mechanism and show how resultant environmental quality and welfare are affected by the choice of grant allocations. Counterintuitively, grant reallocations can be redistributive, Pareto improving, or immiserating, and these results are shaped by the initial distribution of grants and by substitute and complement relationships between private and public consumption.

Controlling an Invasive Species through Consumption: The Case of Lionfish as an Impure Public Good

Controlling an Invasive Species through Consumption: The Case of Lionfish as an Impure Public Good

Economic Incentives for Managing Filterable Biological Pollution Risks from Trade.

Infectious livestock disease problems are "biological pollution" problems. Prior work on biological pollution problems generally examines the efficient allocation of prevention and control efforts, but does not identify the specific externalities underpinning the design of efficiency-enhancing policy instruments. Prior analyses also focus on problems where those being damaged do not contribute to externalities. We examine a problem where the initial biological introduction harms the importer and then others are harmed by spread from this importer. Here, the externality is the spread of infection beyond the initial importer. This externality is influenced by the importer's private risk management choices, which provide impure public goods that reduce disease spillovers to others-making disease spread a "filterable externality." We derive efficient policy incentives to internalize filterable disease externalities given uncertainties about introduction and spread. We find efficiency requires incentivizing an importer's trade choices along with self-protection and abatement efforts, in contrast to prior work that targets trade alone. Perhaps surprisingly, we find these incentives increase with importers' private risk management incentives and with their ability to directly protect others. In cases where importers can spread infection to each other, we find filterable externalities may lead to multiple Nash equilibria.

On the behavioural relevance of optional and mandatory impure public goods

Impure public goods combine a private good with a public good. Often, impure public goods have a charitable or ethical dimension, giving ethically motivated consumers a convenient option to contribute to public goods through the marketplace (in addition to direct donations). Impure public goods could potentially promote ethical giving or alternatively hinder charitable behaviour. We implement an economics experiment with a between-subject design to test the behavioural relevance of impure public goods with only a token (i.e. small) contribution to a public good. Contributions to the public good are negatively affected by the presence of impure public goods with token contributions. We explore one mechanism to offset this negative impact by making the token impure public good mandatory. We observe higher average contributions and several positive impacts on charitable behaviour, which supports the claim that this mechanism can potentially offset the negative impact of impure public goods.

Wallace E. Oates Outstanding Doctoral Dissertation Award

Previous articleNext article FreeWallace E. Oates Outstanding Doctoral Dissertation AwardPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreEach spring, AERE invites outstanding doctoral dissertation nominations from dissertation chairs for their students completing the doctoral degree in the previous calendar year. Dissertations are judged by a panel of AERE members who emphasize originality of research, quality of implementation, and expositional clarity, along with intellectual and practical significance of research findings. The winner receives a cash prize plus assistance in travel funding to attend the next AERE luncheon at the January ASSA meetings for public recognition. Finally, the winner’s dissertation abstract appears in JAERE.We are pleased to announce that Casey J. Wichman is the recipient of the 2015 Wallace E. Oates Outstanding Doctoral Dissertation Award. Wichman graduated in 2015 from the University of Maryland with a PhD in Agricultural and Resource Economics. His dissertation committee was cochaired by Roberton Williams and Maureen Cropper.Information and Environmental PolicyCasey J. WichmanAbstract: The role of information in economic policy has evolved drastically in the 50 years since Stigler’s seminal article on “the economics of information” (Stigler 1961). And yet, in the context of consumer behavior, many interesting questions remain unanswered on the value of information, how it is used in decision making, and precisely how it is ignored. Questions of particular interest encompass the degree to which consumers utilize price information in decision making, whether individuals confronted with changes in the frequency of information received behave as economic models predict, and the value of private information in a regulatory context. While these questions are inherently general, the focus of this research is to address the role of information with applications to environmental and resource economics.Within this manuscript, I present three distinct essays linked by the commonality of how information is utilized in decision making and its effect on environmental policy.In the first essay (Wichman 2014), I evaluate the price to which consumers respond under complicated billing structures. I exploit a natural experiment to estimate a causal effect of price for residential water customers during the introduction of increasing block rates for a North Carolina utility. Perceived price is identified through a billing anomaly in which changes in marginal and average prices move in opposite directions. Empirical results contribute evidence that residential water customers respond to average price. Average price elasticity estimates vary from −0.43 to −1.14 across the distribution of consumption in triple-difference models, with an estimate of −0.31 in the tightest bandwidth of regression discontinuity specifications.In the second essay (Wichman 2015), I examine a causal effect of billing frequency on consumer behavior. I exploit a natural experiment in which residential water customers transitioned exogenously from bimonthly to monthly billing. I find that customers increase consumption by approximately 5% in response to more frequent information. This result is reconciled in a model of price and quantity uncertainty, where increases in billing frequency reduce the distortion in consumers’ perceptions. Using treatment effects as sufficient statistics, I calculate gains in consumer surplus equivalent to 0.5%–1% of annual water expenditures. Heterogeneous treatment effects suggest increases in outdoor water use.And, in the final essay (Wichman 2016), I consider the role of heterogeneous green preferences for private provision of environmental public goods in an asymmetric information context. Under varying degrees of information available to a regulator, I characterize equilibrium properties of several mechanisms. I find incentive compatible Nash equilibria that provide socially optimal public goods provision when the regulator can enforce individual consumption contracts, as well as when reported consumption contracts are supplemented with group penalties. The role of budget balancing is recast as a policy intervention for correcting environmental market failures. Notes Casey J. Wichman is at Resources for the Future, 1616 P Street NW, Washington, DC 20036 ([email protected]).ReferencesStigler, George J. 1961. The economics of information. Journal of Political Economy 69 (3): 213–35.First citation in articleLinkGoogle ScholarWichman, Casey J. 2014. Perceived price in residential water demand: Evidence from a natural experiment. Journal of Economic Behavior and Organization 107:308–23.First citation in articleCrossrefGoogle Scholar———. 2015. Information provision and consumer behavior: A natural experiment in billing frequency. Discussion paper 15-35, Resources for the Future, Washington, DC.First citation in articleGoogle Scholar———. 2016. Incentives, green preferences, and private provision of impure public goods. Journal of Environmental Economics and Management 79:208–20.First citation in articleCrossrefGoogle Scholar Previous articleNext article DetailsFiguresReferencesCited by Journal of the Association of Environmental and Resource Economists Volume 4, Number 1March 2017 Published for the Association of Environmental and Resource Economists Article DOIhttps://doi.org/10.1086/690613 © 2017 by The Association of Environmental and Resource Economists. All rights reserved.PDF download Crossref reports no articles citing this article.

全球公共物品供给与新兴大国参与—基于“非纯公共物品”概念的分析 / Global Public Goods and The Role of Emerging Power: Considering the Concept of Impure Public Goods

现有关于国际公共物品的论述过度关注“公益”性质，相对忽视国家特别是核心国家作为供给主体的主动地位及其战略考量。事实上，核心国家在提供各种国际公共物品时已经考虑到他国“搭便车”的可能性，纳入对外供给与消费模式设计。中国关于“欢迎周边国家搭便车”的提法可以视为此类战略动向的最新回应。为此，有必要重新审视原有理论，理解“搭便车”行为的可能性与现实性，从“非纯公共物品”角度出发讨论国际公共物品的推动因素以及运作机制。作为新兴大国，中国应该明确战略重点，注重“供给”与“营销”相互配合，创设或创新具体形式，提高国际公共物品供给效率与精致程度。 The existing analysis of global public goods over-emphasizes the significance of public. Great power as a main provider has played an active role in these strategic initiatives, which may be ignored. In fact, main power has thought about the possible free-riders when providing public goods and making its foreign strategic plan. China’s announcement to “welcome the neighbouring countries to be a free-rider and benefit from China’s rise” is a good example. It is necessary to think about the theory of public goods and take another look at the free-riding phenomenon. The concept of impure public goods may be useful and effective when we understand the reason why global public goods are being provided and are relatively efficient. As an emerging power, China should have a clear strategy on global public goods with a possible “marketing” viewpoint, including more initiatives and specific measures, so that the global public goods provision may be more diverse and well-planned.

On the interrelation between the consumption of impure public goods and the provision of direct donations: Theory and empirical evidence

This paper investigates the extent to which the possibility of direct donations to a public good may substitute an individual’s consumption of impure public goods. Theoretically, we derive conditions under which donations may serve as substitutes or complements for the consumption of private and impure public goods. We then empirically test our predictions in the context of climate change mitigation using data from online-representative surveys among citizens in Germany and the U.S. Our empirical results indicate a rather complementary relationship between offsetting and other pro-environmental activities in both countries, although individuals substitute certain clean consumption alternatives by offsetting if they lay a sufficiently large weight on environmental preference or if offsetting is perceived to be relatively effective in providing the public good climate protection.

Incentives, green preferences, and private provision of impure public goods

Pro-environmental preferences are being used increasingly in environmental policy. In this paper, I consider the role of heterogeneous green preferences for private provision of environmental goods that have both private and public characteristics. Under different assumptions of information available to a regulator, I characterize equilibrium properties of several mechanisms. I find incentive-compatible Nash equilibria that provide socially optimal public goods provision when the regulator can enforce individual consumption contracts, as well as when reported consumption contracts are supplemented with group penalties. Throughout the paper, I ground the exposition with examples of consumer behavior in the context of green electricity programs and goal setting for energy conservation.

Individuals and Communities: the Importance of Neighbors Volunteering

In this analysis, I examine the effects of community-level volunteering on an individual’s choices regarding time – whether to work and whether to volunteer. In order to better explain the decision to volunteer, a classic pure public goods structure is contrasted with a less restrictive impure public goods model that admits other possible private motivations. The results of this study undermine the neoclassical notion that volunteering can be understood solely as a pure public good that is provided less when others are seen to be contributing. In fact, individuals are found to be more, not less, likely to volunteer when others in their communities do so. An innovative instrumental variables strategy is used to account for reflection bias and the possible endogeneity caused by selective sorting of individuals into neighborhoods, which allows for a causal interpretation of these results. Employment regressions provide preliminary evidence that average volunteering relates, to some extent, with the decision of whether to participate in the labor force. Variations in the effect of average volunteering across age and gender are also explored. The present work is unique by virtue of its use of a large and representative dataset, along with rigorous statistical testing. I use United States Census 2000 Summary File 3 and Current Population Survey (CPS) 2004–2007 September Supplement file data and control for various individual and community-level characteristics.