Consumption Of Public Goods Research Articles

Surplus from publicness in consumption and its equitable distribution

The application of distributive equity has been confined to the allocation of private goods. This paper extends this application to economies with public goods. After the surplus accruing from publicness in consumption of public goods is defined and quantified, we show: (1) There exists an efficient allocation such that the surplus from publicness as well as all of the resources available are equitably distributed. (2) The surplus from publicness fails to be equitably distributed in Lindahl equilibria and in the core, even if the economy starts from an equal distribution of endowments. (3) A certain income redistribution policy should be undertaken to equitably distribute the surplus from publicness.

A note of the theory of international transfers

If each of N trading countries supplies each of several international public consumption goods then sufficiently small international transfers have no effect on the consumption, production or welfare of any country.

Rural Policy-Making and the Location of Public Facilities

In this paper a new formal approach has been offered to assist in the comparison and selection of a policy for a rural region, given a set of feasible policies. The specific policy problem which is addressed concerns the selection of locations for a public facility (for example, a school or a health centre) given a set of feasible locations in a rural region. The good is only available at the chosen locations. The introduction to the paper provides a review on the role of quantitative evaluation in rural policy making. It is argued that a complete evaluation of a public location policy should include both public and private costs which are incurred in the provision and consumption of public goods and services. Comments on some recent social choice literature are offered.The approach involves the analysis of an impact matrix using concordance and multi-dimension scaling techniques. The matrix contains information on the set of alternate locations and the impacts on a set of criteria. The criteria refer to equity and efficiency effects. The analysis allows a classification of the alternate locations, and by incorporating an ideal or hypothetical location into the initial matrix, the classification can be interpreted to identify the relative attractiveness of the locations. To illustrate this approach a hypothetical example is used. Given arural region and a set of five settlements, the problem is to identify the best set of three settlements to receive a public facility. The set of five is derived intuitively from a larger set of twenty settlements. For each location a set of seven criteria are used. The analysis indicates that, of the tenpolicies, two appear to be most satisfactory. For these policies the settlements which receive facilities are identified.In conclusion it should be noted that this approach allows a variety of data to be included and a number of sensitivity analyses can be conducted. The purpose is to improve the quality of the debate among interested parties on the search for appropriate locations for public facilities in rural areas.

On the Pricing of Public Goods

There appears to be some confusion in the extensive literature on the efficient pricing of public goods. On the one hand, it is well known from the work of Samuelson [9, 387-89] and Lindahl [7] that efficiency requires each individual to pay a price which reflects his marginal evaluation of the public good at the efficient quantity. This pattern of prices motivates each individual to consume all the public good supplied, with the sum of the prices motivating the efficient supply.' On the other hand, a widely accepted argument is that no pricing scheme for a public good is consistent with efficiency. Once a public good is provided, this argument goes, non-rivalry in consumption makes the cost of additional consumption equal to zero. Therefore any positive price will discourage consumption that can be provided costlessly. But obviously zero prices will be insufficient to motivate the efficient provision of the public good.2 It is the objective of this paper to show that the above confusion is based on the failure to distinguish between two separate components in the consumption of public goods. These components are the quantity of the public good provided and the time the consumer spends consuming it.3 By incorporating both of these consumption components into a simple model it will be shown in Section II, while fully acknowledging the zero marginal cost of

Government Budgets and Public Services: Some Criteria for Determining the Sources and Levels of Public Goods, including Transport Services

AbstractInstances of non‐optimal consumption of public goods and services can easily arise if individual demand curves are not identical. It does not follow, however, that the best solution to the problem of too little consumption is an increase in government expenditure. Special user charges and voluntary contributions of time, goods, and money on the part of persons that value public goods more highly than the general population have long been important ways of supplementing government spending for social goods. The work trip appears to be a good example of a service area where existing cost structures and pricing methods may be biased against the voluntary associations which are needed to make the United States less dependent on foreign oil. This bias could be corrected by using an income‐tax‐surcharge to help finance the fixed costs associated with mass transit and other types of work trip pooling arrangements.

A competitive model of local government organization: Implications for the process of community formation within metropolitan regions

This paper has been primarily concerned with the impact of alternative governmental structures on public sector efficiency within an urban region. In order to identify some of the implications of economies of scale in production and consumption of public goods, the presence of interjurisdictional externalities, congestion costs in public good consumption, and constraints in housing markets and the way in which these factors are influenced by varying degrees of jurisdictional consolidation, many limiting assumptions have been introduced. Factors such as interjurisdictional differentials in affluence, radical prejudice, suboptimization and externalities exert strong influences on the organizational structures that emerge in existing urban areas. Furthermore, the emergence of new factors (e.g., energy problems, transportation system options, institutional constraints imposed by the interaction of localities with federally funded programs) will no doubt affect the opportunity costs of alternative governmental structures and patterns of community formation. Further research concerning the impact of these additional forces and their relationship to the factors analyzed in the paper would be useful.

A Neglected Issue in Public-Goods Theory: The Monopsony Problem

The recent literature has contained considerable discussion of conditions under which socially optimal levels[1] of public-goods consumption will be achieved through consumer cooperation.[2] However, analyses in this field have neglected one important problem: the potential monopsony situation which arises when consumers cooperate to articulate demand. In several instances neglect of this problem by examination of only constant-cost situations has led to erroneous conclusions. Sharp and Escarraz (1964) conclude that voluntary bargaining among consumers will lead to the optimal output, when they have in fact considered only the special case of perfectly elastic supply. In The Theory of Public Finance (1959) Musgrave also examines only constant-cost situations while stating that figures ... may be adapted to conditions of increasing cost without changing the principle of our argument (p. 76, n. 2). More recently, Buchanan, in The Demand and Supply of Public Goods (1968), makes the constant-cost assumption and consequently arrives at an erroneous conclusion when he states: At equilibrium, the marginal rates of substitution between the public good and the numeraire private good, summed over all persons in the group, must equal the marginal cost of supplying the public good, again expressed in units of the numeraire. This statement of the necessary marginal conditions for equilibrium in a world that contains a public good is fully general, and holds without qualification (p. 43). In this analysis we outline the equilibrium outputs of public goods which result from consumer cooperation under conditions of both constant and increasing costs and discuss some of their implications. [Авторский текст]

The Optimal Provision of Public Goods: A Comment

In a recent issue of this Journal, Alan Williams (1966) presented an analysis of the optimality of public goods supply in a situation in which the public goods are produced by independently operating local governments. By appropriate reference to hitherto neglected income effects, he succeeded in demonstrating that it is possible for too much of the public good to be produced in the aggregate, even though each local government cannot extract payment for the benefits from its public good production which spill out onto other local government areas. The question under discussion is conceptually equivalent to the question of the direction of the distortion resulting under conditions of independent adjustment in a situation of reciprocal externalities of the separable variety,1 and Williams' analysis can be applied equally well to this case. Thus, if A's production of X reduces the total (but not marginal) cost of B's production of X, and B's production of X likewise reduces the total (but not marginal) cost of A's, Williams' result indicates that, where A and B act independently, oversupply of X may result. To those familiar with the work of Buchanan and Kafoglis (1963) and of Baumol (1964), this conclusion may not, in itself, be very surprising. What is perhaps more interesting is Williams' assertion that, although oversupply of public goods can occur in the aggregate, it is not possible for public goods consumption to be overexpanded in every local government area. Or, in the individual case, although too much of X may be produced in toto, simultaneous overproduction by A and B is impossible.2