Theory Of Public Goods Research Articles

A constitutional theory of public goods

The conventional justification for public provision is market failure. This paper argues instead that the rationale for public provision of goods is the existence of utility interdependencies across demanders: individuals choose what goods are public at the constitutional level based on degrees of utility interdependence in consumption. The paper first develops an analytical argument for shifting from non-excludability and joint consumption to utility interdependence in the analysis of public goods. It then presents a model of the constitutional calculus concerning modes of goods provision, and applies the model to simple choice scenarios. Broad policy implications of the model are drawn. In particular, a constitutional theory of public goods asserts the need for careful institutional design and definition of public powers more strongly than the market failure view.

The Creation, Maintenance and Governance of Public Goods and Free Goods

The theory of public goods is largely irrelevant to their management and governance. It is highly normative but is unused in the policy area. It remains centred on highly idealized and dichotomized characteristics (non-rivalrousness and non-excludability) of public goods despite important theoretical progress in the last twenty years. It is suggested that public goods are as much social as technological constructions, but there is no explanation of how such goods come into existence. It is argued that they are often subject to evolution that changes the balance of their characteristics between being public or private goods. Present theory bears little relationship to the governmental budgetary processes assumed necessary to finance such goods, yet all management and maintenance costs, often high enough to deter such funding, are ignored. While there is recognition that the intensive use of a public good often imposes costs directly upon users, there is no corresponding recognition either that inappropriate and intensive usage can erode public goods as assets or that such usage is difficult to control. Free goods are described and mooted as specific and important types of public goods. Illustrative examples of public and free goods, mainly from Australia and the Pacific, are cited.

Global and Regional Public Goods: A Prognosis for Collective Action

AbstractThis paper applies modern concepts from the theory of public goods to indicate why progress has been made with respect to some global and regional public goods (for example, cutting sulphur emissions) but not with respect to others (for example, cutting greenhouse gases). Factors promoting collective action at the transnational level include the removal of uncertainty, a high share of nation‐specific benefits, a limited number of essential participants and the presence of an influential leader nation. The impact of public good aggregation technologies on the future provision of transnational public goods is related to the trend in world‐wide income inequality. Principles are presented for designing supranational structures for addressing transnational public good problems. JEL classification: H41, D70, Q20.

Maintaining System Stability

This article examines the ways and degrees to which nation-states participate in and financially support United Nations peacekeeping operations (UN PKOs). The authors contend that UN PKOs are impure public goods whose provision conforms to expectations from public goods theory that deals with the provision of impure public goods and club goods, and much less to the hegemonic stability variant of the public goods approach. Conceptual arguments are followed by an examination of general patterns of UN PKOs, personnel and financial contributions to them, and the U.S. role in them. The authors conclude that the post-cold war period has seen a notable increase in the volume of provision of peacekeeping and in the quantity and diversity of contributors and beneficiaries. They recognize the difficulties posed by recent U.S. nonpayments and suggest the possibility of adjustments that will reestablish the financial basis that continuing substantial provision will require.

Wheat Rusts and the Costs of Genetic Diversity in the Punjab of Pakistan

AbstractThe theory of impure public goods is used to demonstrate why farmers may not grow wheat cultivars with the socially desirable level of rust resistance. First, they may grow cultivars that are high yielding though susceptible to rust. Second, many farmers may grow cultivars with a similar genetic basis of resistance. Expected rust losses can be reduced by (a) more diversified genetic background in released wheat cultivars; (b) greater spatial diversity in planted cultivars; or (c) use of a temporally changing list of cultivars known to be rust resistant. Yield trade‐offs associated with these policies illustrate potential costs of increasing genetic diversity.

Production, Disbursement and Consumption: The Modes and Modalities of Goods and Services

Two completely separate literatures have analysed government involvement in consumption; the collective consumption stream in urban studies and neo-classical economics' account of public goods. Both traditions have significantly converged in recent years, especially in recognizing a differentiated spectrum of provision in place of previous dichotomous categories. Collective consumption theories have poorly explained consumption process trends, but captured many of the key social and political causes of change. Public goods theories have underpinned public policy shifts, and thus been congruent with the direction of change, but poorly explained the social and political dynamics involved. An integrated theory bridging both approaches should better explain the relative autonomy of consumption processes.

A theory of the theory of public goods

The article critically examines the traditional theory of public goods, it is an established part of the theory of public finance. The author shows that this theory in the form in which it is treated by its creators and authors of modern textbooks, can serve no empirical explanation for the production of a good in the public sector, no regulatory justification for such production. Then, the article developed political economy concept that the fact that some goods are produced and provided by the state, is due to the interests of the state, seeking to build up their own wealth and political power. In this context, the very theory of public goods and its promotion are explained as part of a system of institutions, ensuring the preservation and expansion of the power and influence of the state in society.

The Pure Theory of Public Goods: Efficiency, Decentralization, and the Core

The authors extend the findings of Mas-Colell on valuation equilibria and the relationship of cost-share equilibria with the core. They allow for any finite number of private goods and a set of public projects without any structure. The authors show the two welfare theorems for valuation equilibrium, the inclusion of the set of cost-share equilibria in the core, and the nonequivalence of these two sets for an economy with a finite number of agents. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Public sector unions and public spending

This study examines the influence of public sector unions on the expansion of the public sector. Based on public goods theory, our paper models how unions influence the supply of and demand for public sector activities. On the demand side, public sector unions are special interests which advocate public sector expansion to policy makers; on the supply side, they exert pressure to maintain and expand monopoly powers. Empirical evidence supports the hypothesis that a positive relationship exists between public sector unionism and public spending.

Is Language a Game?

Recent developments in game theory have shown that the mathematical models of action so widely admired in the study of economics are in fact only particular instantiations of a more general theoretical framework. In the same way that Aristotelian logic was ‘translated’ into the more general and expressive language of predicate logic, the basic action theoretic underpinnings of modern economics have now been articulated within the more comprehensive language of game theory. But precisely because of its greater generality and expressive power, game theory has again revived the temptation to apply formal models of action to every domain of social life. This movement has been fuelled by some notable successes. Game theory has provided useful insights into the logic of collective action in the theory of public goods, and strategic models of voting have illustrated important aspects of institutional decision-making. But this extension of formal models into every area of social interaction has also encountered significant difficulties, despite the fact that contemporary decision theory has weakened its basic assumptions to the point where it teeters constantly on the brink of vacuity.

THE ECONOMICS AND ETHICS OF PRIVATE PROPERTY: STUDIES IN POLITICAL ECONOMY AND PHILOSOPHY

Part One: Economics. 1. Fallacies of the Public Goods Theory and the Production of Security. 2. The Economics and Sociology of Taxation. 3. Money, Banking, and International Politics. A Sociological Reconstruction of the Present Economic Order. 4. Marxist and Austrian Class Analysis. 5. The Theory of Employment, Money, Interest, and the Capitalist Process. The Misesian Case against Keynes. Part Two: Philosophy. 6. On Praxeology and the Praxeological Foundation of Epistemology 7 Is Research Based on Causal Scientific Principles Possible in the Social Sciences? 8. From the Economics of Laissez Faire to the Ethics of Libertarianism. 9. The Justice of Economic Efficiency. 10. On the Ultimate Justification of the Ethics of Private Property. 11. Austrian Rationalism in the Age of the Decline of Positivism.

Connective and Communal Public Goods in Interactive Communication Systems

This paper extends theories of public goods to interactive communication systems. Two key public communication goods are identified. Connectivity provides point-to-point communication, and communality links members through commonly held information, such as that often found in databases. These extensions are important, we argue, because communication public goods operate differently from traditional material public goods. These differences have important implications for costs, benefits, and the realization of a critical mass of users that is necessary for realization of the good. We also explore multifunctional goods that combine various features and hybrid goods that link private goods to public ones. We examine the applicability of two key assumptions of public goods theory to interactive communication systems. First, jointness of supply specifies that consumption of a public good does not diminish its availability to others. Second, impossibility of exclusion stipulates that all members of the public have access to the good. We conclude with suggestions for further theoretical development.

Economic Approaches to Understanding Nonmarital Fertility

This book chapter presents a strategy for modeling nonmarital fertility and marriage as separate decisions by gender. The growth of nonmarital fertility in the US and the differences by race and socioeconomic status are explained in a model by Willis (1995) on the labor market experiences of men and women. Nonmarital childbearing can be explained by the balance between mens ability to take advantage of womens willingness and ability to raise their children and mens low or zero economic costs of child support. The net impact of womens income and price effects could result in having no children or fewer children because the child costs are greater than what she may be willing to pay from her own full income. Public goods theory implies that allocations of joint incomes of both father and mother could increase the utility of both parents. But if the mother cares more than the father about the well-being of the children the greater will be the expenditures particularly from the mother because of free-riding associated with the provision of public goods. An efficient allocation of resources for child support is not expected in a noncooperative bargaining model (a Stackelberg model) between a single custodial mother and a noncustodial father. As the mother increases her income and is able to support the child at a more adequate level from her own resources the fathers optimum transfer of income tends to decrease and even reach zero. Marriage and a binding contract that includes provisions in a potential divorce settlement solves collective goods problems. Weiss and Willis argue that deadbeat dads may withdraw generous support that occurred within marriage when love trust and mutual altruism between husband and wife disappear in divorce. Argys and Peters argument is that cooperative agreements about shared resources are possible among parents not living together but these parents face many difficulties. Policy can directly raise the cost of nonmarital fertility to men.

A note on the relationship of interdependent action to the optimality of certain voting decisions

While the theory of public goods points to socially suboptimal contributions by agents acting under Cournot assumptions, this externality can be rectified by the introduction of positive interdependence of actions to the individual's choice calculus. This paper draws attention to the fact that the institution of democratic voting is itself a means of transforming the individual calculus in such a way that parameter changes are evaluated as simultaneous adjustments by the group, on the side of benefits, but by the individual only, on the side of costs, thus generating optimal parameter preference in the case of identical agents.

Resources Rather than Needs: A State-Centered Model of Welfare Policymaking

This study examines the states' policymaking for the Aid to Families with Dependent Children (AFDC) program. It develops a public good model of welfare policymaking focused on changes in the maximum benefit level that determines how much assistance poor families receive. A pooled time-series analysis is used to test the model's expectations. This examination confirms some expectations of the public good theory while challenging others. Changes in state revenues strongly influence states' decisions about AFDC benefit levels. However, neither changes in citizens' income nor changes in the cost of living have a significant effect on states' decisions. These findings question the public good theory's focus on transfers from private income and its characterization of concern for the living conditions of poor families as the central motive for welfare transfers. They indicate that the explanation of AFDC policymaking should be focused on the role of state policymaking processes, particularly the budgetary process.

Are Public Goods Myths?

This paper makes the case that nonrivalness and nonexcludability properties of public goods are still relevant and crucial considerations. Although these characteristics of publicness may be socially endogenous with institutional choice, these properties are not necessarily determined by this choice. For club goods, a wide range of institutional structures are consistent with the same properties of publicness. Even when these publicness properties are endogenous, the resulting characteristics of the public good are still important for comparing equilibrium outcomes with social optima. Although public good theory has been misused by some to support public provision of such goods, this misuse does not mean that the modern theory is devoid of interest.

Donated blood—Gift or commodity?: Some economic and ethical considerations on voluntary vs commercial donation of blood

The author applies the theory of public goods on donated blood. Donated blood may be taken as a ‘public good’ like water and air, police and firebrigades. This theory tends to imply a preference for voluntary donation and bloodbanking by public and nonprofit organisations as well as for low cost supply. An additional commercial supply of blood nevertheless is welcome. Quality as well as quantity of blood depend first of all on the willingness to donate and the honesty of the donors about their health. An altruistic motivation alone, which is not triggered by some material incentive, does not in all systems guarantee a sufficient quantity of safe blood. Both the altruistic as well as the reembursement-oriented donor's willingness and honesty have to be guarded by sound practice in bloodbanking and adequate public control within a legal framework which reflects the vital role of blood supply. A legal implementation of product liability will certainly be an important instrument in this field.

A further look at consistent conjectures and private provision of public goods

A model of private provision of a public good under conjectural variations is discussed and the rule for a symmetric consistent conjectures equilibrium (CCE) derived. It is shown that in a number of reasonable cases symmetric CCEs fail to exist in economies with identical individuals, while there may exist asymmetric ones. The relevance of these results for the use of the conjectural variations approach in public good theory is then discussed together with some suggestions for further research.

Concurrence et biens publics

I discuss the extent to which the theory of local public goods and clubs is an extension of competitive theory. To do this I reinterpret efficiency results in the literature as arising from optimization against a complete price system. For clubs I give a framework to unify club economies with anonymous and nonanonymous crowding. Competitive equilibrium is equivalent to the equal-treatment core, and core payoffs satisfy a monotonicity property: An increase in the number of one type of player will reduce their core payoff. When the partition of the population is constrained by fixed geographic boundaries, efficiency is second-best. A complete price system can be used to describe capitalization, and optimization relative to this price system leads to second-best efficiency. For both branches of the literature I offer criticisms of the price systems and equilibrium concepts.

Principals, Agents and the Economics of Accountability in the New Public Sector

Examines the recent changes made to the public sector in the UK in the context of relevant economic models, including the principal‐agent model, public goods theory and the median voter model. Considers a number of possible justifications for the changes, including the emulation of the private sector as a model of accountability and efficiency, and increasing the accountability of the public sector. Finds major problems with each of these justifications, highlights other possible explanations for the changes, and emphasizes the importance of the concept of “residual loss” when monitoring and bonding processes are imperfect.