Impure Public Goods Research Articles

Green Goods: Are They Good or Bad News for the Environment? Evidence from a Laboratory Experiment on Impure Public Goods

An impure public good is a commodity that combines public and private characteristics in fixed proportions. Green goods such as dolphin-friendly tuna or green electricity programmes provide increasingly popular examples of impure public goods. We design an experiment to test how the presence of impure public goods affects pro-social behaviour. We set parameters, such that from a theoretical point of view the presence of the impure public good is behaviourally irrelevant. In a baseline setting, where the impure public good provides only small contributions to the public good, we observe that on aggregate pro-social behaviour, defined as total contributions to the public good, is lower in the presence of the impure good. Some individuals do not alter their decisions, but roughly two fifths of subjects make a lower contribution to the public good in the presence of the impure public good. On the contrary, in the case where the impure public good favours the public good component at the expense of private earnings, individuals are unaffected in their behaviour. We conclude that the presence of green goods which have only a small environmental component may reduce pro-environmental behaviour.

Environmental efficiency and labour productivity: Trade-off or joint dynamics? A theoretical investigation and empirical evidence from Italy using NAMEA

In this paper we test an adapted EKC hypothesis to verify the relationship between ‘environmental efficiency’ (namely emissions per unit of value added) and labour productivity (value added per employee). We exploit NAMEA data on Italy for 29 sector branches and 6 categories of air emissions for the period 1991–2001. We employ data on capital stock and trade openness to test the robustness of our results.On the basis of the theoretical and empirical analyses focusing on innovation, firm performances and environmental externalities, we would expect a positive correlation between environmental efficiency and labour productivity — a negative correlation between the emissions intensity of value added and labour productivity — which departs from the conventional mainstream view. The hypothesis tested is a critical one within the longstanding debate on the potential trade-off or complementarity between environmental preservation and economic performance, which is strictly associated with the role of technological innovation. We find that for most air emission categories there is a positive relationship between labour productivity and environmental efficiency. Labour productivity dynamics, then, seem to be complementary to a decreasing emissions intensity in the production process. Taking a disaggregate sector perspective, we show that the macro-aggregate evidence is driven by sector dynamics in a non-homogenous way across pollutants. Services tend always to show a ‘complementary’ relationship, while industry seems to be associated with inverted U-shape dynamics for greenhouse gases and nitrogen oxides. This is in line with our expectations. In any case, EKC shapes appear to drive such productivity links towards complementarity. The extent to which this evidence derives from endogenous market forces, industrial and structural change, and policy effects is discussed by taking an evolutionary perspective to innovation and by referring to impure public goods arguments.

Fiscal Federalism and Grant-in-Aid Design for the Provision of Impure Public Goods

The traditional fiscal federalism theory shows that the devolution of functions for the supply of local public goods may increase welfare. However, most services offered at local level are impure local public goods with spillovers. These goods have specific characteristics that may prevent devolution to be the best solution in this context. In this paper we develop a model that studies fiscal federalism and we provide grants-in-aid distribution formulae in an environment charaterized by asymmetry of information and coordination problems.We show the set of rules for determining when devolution is a superior alternative to decentralization.

Impure Public Technologies and Environmental Policy

Analyses of public goods regularly address the case of pure public goods. However, a large number of (international) public goods exhibit characteristics of different degrees of publicness, i.e. they are impure public goods. In our analysis of transfers helping to overcome the inefficient provision of such goods, we therefore apply the Lancastrian characteristics approach. In contrast to the existing literature, we consider the case of a continuum of impure public goods. We employ the example of international conditional transfers targeting to overcome suboptimal low climate protection efforts by influencing the abatement technology choice of countries.

Private provision of environmental public goods: Household participation in green-electricity programs

Green-electricity programs provide an opportunity to study private provision of an environmental public good in a field setting. The first part of this paper develops a theoretical framework to analyze household decisions about voluntary participation in green-electricity programs. We consider different participation mechanisms and show how they relate to existing theory on either pure or impure public goods. The models are used to examine the implications of participation mechanisms for the level of public-good provision. The second part of the paper provides an empirical investigation of actual participation decisions in two green-electricity programs—one based on a pure public good and the other based on an impure public good. The data come from original household surveys of participants and nonparticipants in both programs, along with utility data on household electricity consumption. The econometric results are interpreted in the context of the theoretical models and are compared to other studies of privately provided public goods.

Private Provision of a Public Good: Land Trust Membership

<i>Land trusts prevent the development of open space, providing both public and impure public goods to area residents. This study examines the relationship between these benefits and membership levels for a sample of 91 land trusts, while controlling for local demographic and area characteristics. Trusts that offer member-only access to property have higher membership, but most trusts do not provide such benefits. Membership increases with local population, but at a decreasing rate, consistent with the free-riding behavior found in other studies of collective action. The study finds the existence of scope effects with respect to the amount of protected acreage.</i> (JEL Q15, H00)

Impure Public Goods Provision in a Federal Fiscal System

Impure Public Goods Provision in a Federal Fiscal System

Control Rights in Public-Private Partnerships

This paper develops a theory of the allocation of authority between two parties that produce impure public goods. We show that the optimal allocation depends on technological factors, the parties' valuations of the goods produced, and the degree of impurity of these goods. When the degree of impurity is large, control rights should be given to the main investor, irrespective of preference considerations. There are some situations in which this allocation is optimal even if the degree of impurity is very low as long as one party's investment is more important than the other party's. If the parties' investments are of similar importance and the degree of impurity is large, shared authority is optimal with a greater share going to the low-valuation party. If the importance of the parties' investments is similar but the degree of impurity is neither large nor small, the low-valuation party should receive sole authority. We apply our results to a number of situations, including schools and child custody.

Grants in Aid to Local Government: Median Voter and Political Biases

The traditional theory for fiscal federalism assumes that the lower tier is more efficient in producing local public goods because of information asymmetry, while on the finance side Central Government might be more efficient in raising resources that will then be distributed through grants-in-aid. This scheme does not take into account that services produced at local level are usually impure public goods and that Central Government might want to pursue other objectives instead of a straight maximisation of social welfare. The model developed in this paper allows to derive grants-in-aid distribution formulae in this environment. The modelling structure is based on Lancaster's characteristic approach as applied to impure public goods by Cornes and Sandler (1994). It is shown that when political considerations enter in the allocation process, the second theorem of fiscal federalism is no longer valid. The model is then able to give another compelling institutional reason for the flypaper effect.

Impure public goods and technological interdependencies

PurposeThis paper aims to investigate empirically the findings of an analytical impure public good model. The impure public good model described in this study allows for the application of different technologies generating public and private characteristics. The influence of the individual technologies on the total level of (impure) public good provision is of main concern in this study.Design/methodology/approachAfter the illustration of the impure public good model, the analytical results are compared to the results of a numerical approach based on climate policy in Germany.FindingsThe study shows that comparative static analyses do not always generate clear results. Therefore, the numerical approach is helpful to derive unambiguous results. The paper finds that technologies which exclusively generate private characteristics may have significant effects on total impure public good provision, since they may replace the private characteristics of the impure public good.Originality/valueThis paper provides useful information on the influence of the individual technologies on the total level of (impure) public good provision.

Impure Public Goods and Technological Interdependencies

Impure public goods represent an important group of goods. Almost every public good exerts not only effects which are public to all but also effects which are private to the producer of this good. What is often omitted in the analysis of impure public goods is the fact that - regularly - these private effects can also be generated independently of the public good. In our analysis we focus on the effects alternative technologies - independently generating the private effects of the public good - may have on the provision of impure public goods. After the investigation in an analytical impure public good model, we numerically simulate the effects of alternative technologies in a parameterized model for climate policy in Germany.

Collective action in plant breeding

Olson (1965) formulated a Logic of Collective Action. We investigate whether a logic of collective action in plant breeding - and research and development generally - can be constructed. Using a case study on the Latin American Fund for Irrigated Rice (FLAR) as well as other real-world institutions of collective action in R&D, we construct an expanded logic of collective action, which revolves around two core features: Impure public goods and the tragedy of the anticommons. Provisions of FLAR and other institutions are related to game theory and contract theory, and theoretical, methodological and policy implications are outlined.

Impure public goods and the comparative statics of environmentally friendly consumption

This paper develops an impure public good model to analyze the comparative statics of environmentally friendly consumption. “Green” products are treated as impure public goods that arise through joint production of a private characteristic and an environmental public characteristic. The model is distinct from existing impure public good models because of the way it considers the availability of substitutes. Specifically, the model accounts for the way that the jointly produced characteristics of a green product may be available separately as well—through a conventional-good substitute, direct donations to improve environmental quality, or both. The analysis provides a theoretical foundation for understanding how demand for green products and demand for environmental quality depend on market prices, green-production technologies, and ambient environmental quality. The comparative static results generate new insights into the important and sometimes counterintuitive relationship between demand for green products and demand for environmental quality.

Governing snowmobilers in multiple-use landscapes: Swedish and Maine (USA) cases

Snowmobiling growth in North America and Sweden creates challenges in “governing the commons.” Snowmobiling contributes to the economy of distressed rural regions and enhances residents' quality of life; but quasi-open access to winter landscapes also breeds conflicts: among snowmobilers, with landowners, with other recreationists, and with environmentalists and ecosystem health. Common pool resource and impure public goods theories are used to interpret these conflicts and strategic interactions. Case studies in Sweden and Maine yield insights about conditions for sustainable management of multiple-use landscapes when property rights are complex and stakeholders diverse. The case studies utilize key informant interviews, tourist surveys, and a contingent valuation exercise to illustrate how innovative governance institutions, complemented by infrastructure investments, can mitigate conflicts, re-align incentives, and internalize costs. Local self-governance has evolved with state facilitation, but without changes in fundamental property law. Three keys are trail agreements between snowmobile clubs and landowners, clubs' norm formation and rule enforcement, and public–private investment in quality trails. These arrangements are strained by hot spot congestion, free riding, and unresolved conflicts with other recreationists.

Shared Consumption: A Technological Analysis

James BUCHANAN (Economica, [1966]) has argued that Alfred MARSHALL'S theory of jointly-supplied goods can be extended to analyze the allocation of impure public goods. This article introduces a way of modelling sharing technologies for jointly-supplied goods that captures the essential features of BUCHANAN'S proposal. Public and private goods are special cases of shared goods obtained by appropriately specifying the sharing technology. Necessary conditions for an allocation in a shared goods economy to be PARETO optimal are identified and related to the optimality conditions for public and private goods.

Comment on “Rotten Kids, Purity, and Perfection”

Previous articleNext article No AccessCommentComment on “Rotten Kids, Purity, and Perfection”Pierre‐André Chiappori and Iván WerningPierre‐André ChiapporiUniversity of Chicago Search for more articles by this author and Iván WerningUniversity of Chicago and Universidad Torcuato di Tella Search for more articles by this author University of ChicagoUniversity of Chicago and Universidad Torcuato di TellaPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 110, Number 2April 2002 Article DOIhttps://doi.org/10.1086/338745 Views: 95Total views on this site Citations: 10Citations are reported from Crossref © 2002 by The University of Chicago. All rights reserved. PDF download Crossref reports the following articles citing this article:Thomas Demuynck, Tom Potoms Weakening transferable utility: The case of non-intersecting Pareto curves, Journal of Economic Theory 188 (Jul 2020): 105035.https://doi.org/10.1016/j.jet.2020.105035João Ricardo Faria, Emilson Caputo Delfino Silva Leadership delegation in rotten kid families, Journal of Population Economics 33, no.22 (Nov 2019): 441–460.https://doi.org/10.1007/s00148-019-00755-4Helmuth Cremer, Kerstin Roeder Rotten spouses, family transfers, and public goods, Journal of Population Economics 30, no.11 (Aug 2015): 141–161.https://doi.org/10.1007/s00148-015-0564-xEmilson Silva Selective Decentralized Leadership, SSRN Electronic Journal (Jan 2013).https://doi.org/10.2139/ssrn.2343231Richard Cornes, Jun-ichi Itaya, Aiko Tanaka Private provision of public goods between families, Journal of Population Economics 25, no.44 (Oct 2011): 1451–1480.https://doi.org/10.1007/s00148-011-0388-2Arthur J. Caplan, Emilson C. D. Silva Impure public goods, matching grant rates and income redistribution in a federation with decentralized leadership and imperfect labor mobility, International Tax and Public Finance 18, no.33 (Dec 2010): 322–336.https://doi.org/10.1007/s10797-010-9158-4Bouwe R. Dijkstra Samaritan versus rotten kid: Another look, Journal of Economic Behavior & Organization 64, no.11 (Sep 2007): 91–110.https://doi.org/10.1016/j.jebo.2006.06.006Marko Köthenbürger Ex-post redistribution in a federation: Implications for corrective policy, Journal of Public Economics 91, no.3-43-4 (Apr 2007): 481–496.https://doi.org/10.1016/j.jpubeco.2006.08.004Arthur J. Caplan, Emilson C. D. Silva An equitable, efficient and implementable scheme to control global carbon dioxide emissions, International Tax and Public Finance 14, no.33 (Aug 2006): 263–279.https://doi.org/10.1007/s10797-006-9002-zVan Kolpin The modeling and analysis of rotten kids, Social Choice and Welfare 26, no.11 (Oct 2005): 23–30.https://doi.org/10.1007/s00355-005-0025-7

The provision of impure public goods in a non-competitive market

The paper deals with the provision of impure public goods in a non-competitive market where two firms, a public and a private one, produce a differentiated product and have a degree of monopoly power. The characteristic of the industry output, having a private (appropriable) and a public (collective) element, is represented as a positive externality produced by total consumption (total industry output) on each consumer. The aim of the paper is twofold: we show how to model impure public goods in monopolistic competitive markets within a computable general equilibrium model and we give important insights into second best policies in these markets where subsidies to correct for positive externalities should be given to firms that, given the imperfect competitive nature of the market, apply a price higher than their marginal cost.

Public Opinion and International Policy Choices: Global Commitments for Japan and Its Peers?

To understand the prospects for global order and progress in the coming years, we explore the joint implications of three premises: (1) states advantaged by the current international order have stakes in its regularity and predictability, and thus in moving to counter or prevent threats to those stakes; (2) along impure public and club goods lines, they are more likely to make efforts to do so when some private or club benefits result; and (3) public opinion provides a bounded policy acceptance envelope offering incentives and disincentives to national political elites to act as envisioned by the first two premises. We present a mosaic of public opinion in major OECD countries (the US, Japan, and major EU members) on three policy areas – foreign aid, UN peace-keeping operations, and environmental quality – that contain international public goods elements. Actual contribution tendencies in those areas found in our previous work largely conform to the public opinion patterns reported here. Within the limits of available data, domestic political incentives as represented by public opinion warrant neither extreme optimism nor pessimism about the prospects for continuing contributions by OECD states to sustaining orderly functioning of the current world system.

Effects of Technology Transfers on the Provision of Public Goods

In this paper, we examine the viability of cooperative policies oriented to the resolution of transboundary pollution problems using the theory of private provision of public goods in a two- country model. We analyze the effects on economic welfare of voluntary technological transfers oriented to reducing the emission of pollutants. Our analysis shows that when the atmosphere is taken as a pure public goods, "a strong paradox" emerges: the advanced country, in spite of the transfer, sees its economic welfare improved while the developing country sees it worsen. Moreover, if both a technical and an income transfer occur, this paradox might not be solved. Furthermore, "a paradoxical improvement" occurs when the advanced country does not take any policy towards the environment but the developing country does: an improvement in the level of technology in the developing country allows for an expansion of the level of utility in both countries. On the other hand, in the case where the atmosphere is taken as an impure public goods, when both countries pursue an abatement policy, the transfer of technology leads to an improvement in welfare in both countries.

Property rights and sustainable nature tourism: adaptation and mal-adaptation in Dalarna (Sweden) and Maine (USA)

Tourism is viewed in many industrial nations as an environmentally friendly way to revitalize distressed rural economies and communities. In the forest regions of Dalarna and interior Maine, hopes are pinned on nature-based tourism, with the presumption that natural capital is underutilized. This paper explores the potential and pitfalls of nature tourism as a basis for sustainable rural development in regions where most land is held privately but quasi-open access for recreation has been either a right (Dalarna) or a customary entitlement (Maine). The paper applies theories of common pool resources and impure public goods to show that both property regimes are mal-adapted for sustainable nature tourism. Limited exclusion combined with rivalness in land uses mis-aligns incentives facing landowners, tourists, and recreation businesses. Short-term effects include congestion, reduced economic opportunity, and depressed production of non-recreational goods. Longer-term effects include environmental degradation and weak incentives for value-added investment. Tourism development is further impeded by a scale mis-match between small ownerships and large efficient recreation management units. The analysis suggests that sustainable nature tourism faces four land use challenges.