Public Good Economies Research Articles

Lessons and challenges of China's state‐led and party‐dominated governance model

AbstractThe case of China gets at one of the core questions that the Berggruen Governance Index (BGI) poses—can we necessarily assume that democratic accountability makes for better governance performance? China has steadily improved in public goods and state capacity according to the BGI data from 2000 and 2019, especially in terms of economic public goods and fiscal capacity due to its rapid GDP growth under an investment‐led growth model. However, China's democratic accountability has worsened, presenting an uncommon case of improved governance performance. Now China's economy stands at a crossroads amid the precedent‐breaking leadership of Xi Jinping. Will China disprove the ‘autocratic fallacy,’ whereby a dominant state setting priorities and making decisions for a society is sufficient? To what extent can China improve public goods provision and expand state capacity while limiting voice processes? This article examines key policies and strategies of China's governance performance over the past two decades. It also identifies future challenges underlying China's party‐dominated and whole‐of‐nation approach to governance and its investment‐led and export‐oriented development model.

The public good of higher education: a lexical-based comparison of the Chinese and Anglo-American approaches

ABSTRACT The idea of the public good of higher education is closely related to the political, social and educational cultures in which higher education is embedded. It varies across contexts. However, widely used notions of the ‘public’ aspects of higher education, including the concepts of economic public goods and private goods, conventionally assume Anglo-American state/society/university assemblages. Anglo-American (and more generally, Western) discourses and terms are dominant in scholarship on public policy and higher education. This creates obstacles and lacunae in comparative studies, and employing solely Anglo-American notions can be especially problematic in non-Anglo-American contexts. This paper attempts to move beyond the conventional approach by conducting a lexical-based comparison of the Chinese and Anglo-American approaches to the public aspects of higher education. It identifies and explores key concepts of the public good of higher education in both the Chinese and English languages, establishing similarities and differences. The comparison contributes to a more balanced understanding of the public roles of higher education, illuminates new aspects of ‘public’, and may facilitate mutual understanding between scholars and between the Chinese and Anglo-American higher education systems.

On the Existence and Uniqueness of Bayesian Matching Equilibrium in a Public Good Economy

On the Existence and Uniqueness of Bayesian Matching Equilibrium in a Public Good Economy

COVID-19 and the Counter-cyclical Role of the State in South Africa

The COVID-19 pandemic has disrupted social and economic activities across the world, resulting in the contraction of national economies and the global economy, causing an unprecedented loss of employment. The pandemic’s detrimental impact has meant that governments have to play an interventionist role to mitigate the staggering social and economic effects of the COVID-19 lockdown on sustainable development. In light of the damaging impact of the pandemic on the economy, employment and poverty, this article assesses the socio-economic contribution and effectiveness of the counter-cyclical policies in mitigating the socio-economic impact of COVID-19 in South Africa. Methodologically, the article used secondary qualitative and quantitative data to assess the government’s fiscal and monetary measures. The findings suggest that South Africa adopted extensive counter-cyclical fiscal and monetary policies, such as increased government spending on social and economic public goods, tax relief, interest rate cuts and job protection measures. While these counter-cyclical measures had some degree of effectiveness, they were undermined by the lack of comprehensively targeted measures for low-income households. This article argues that the country needs to find proactive ways of managing its counter-cyclical fiscal measures to ensure a higher degree of effectiveness and economic stabilization to reach those in greatest need.

Protections from natural disasters as local public goods: Migration and local adaptations

We investigate a two-location local public goods economy in which agents choose their residential location and are faced with location-specific disaster risks. The majority of residents determine the amount of local public protection financed by local income tax. We assume constant relative risk aversion utility functions with basic housing consumption and show that the equilibrium allocation is sorted. When disaster risks in a location increase, population and housing prices decrease while tax rates increase, but the opposite occurs in the other one. Moreover, we evaluate policy tools, including federal aid and the inter-jurisdiction transfer. We find that in-kind transfers harm the poor in the riskier location by increasing housing prices, whereas the money transfer can be beneficial.

Matching in the Kolm triangle: interiority and participation constraints of matching equilibria

PurposeIn this paper we show how the Kolm triangle method, which is a standard tool for visualizing allocations in a public good economy, can also be used to provide a diagrammatical exposition of matching mechanisms and their effects on public good supply and welfare. In particular, we describe, on the one hand, for which income distributions interior matching equilibria result, and on the other hand, for which income distributions the agents voluntarily participate in a matching mechanism. As a novel result, we especially show that the “participation zone” is larger than the “interiority zone”Design/methodology/approachWe employ the Kolm triangle approach, which has – compared to most other graphical methods for representing allocations in a public good economy – the advantage that it allows for showing the aggregate budget constraint, the levels of considered agents' private consumption, and the level of public good supply directly in the same diagram.FindingsThe Kolm triangle method can be used to visualize important effects of matching in an elegant way, so basically the increase of public good supply through matching. The interiority of matching depends on the income distribution and especially, on how the “interiority zone” is shrinking when the matching rate increases. Moreover, we were able to delimit the “participation zone” in the Kolm triangle. An important and novel insight is that the participation zone is larger than the interiority zone, which means that also corner matching equilibria in which only one agent makes a positive flat contribution to the public good may make both considered agents better off.Research limitations/implicationsCorner matching equilibria in which only one agent makes a positive flat contribution to the public good may improve all considered agents' welfare. How this welfare effect can be generalized to the case of different utility functions and matching rates will be an issue of future research.Practical implicationsThe examined matching mechanism finds application in many policy fields where public good undersupply is pending. International climate policy is one of these fields of application, for example.Originality/valueThe Kolm triangle method has been particularly helpful to describe the Nash equilibrium in the case of non-cooperative public good provision and to compare this outcome with Pareto efficient public good allocations. Furthermore, the Kolm triangle approach facilitates the analysis of mechanisms for attaining an efficient public good allocation like the Lindahl equilibrium as well as the study of preconditions and limitations faced by such mechanisms. An important and novel insight of our study is that the participation zone is larger than the interiority zone.

Bargaining foundation for ratio equilibrium in public‐good economies

AbstractWe provide a bargaining foundation for the concept of ratio equilibrium in public‐good economies. We define a bargaining game of alternating offers, in which players bargain to determine their cost shares of public‐good production and a level of public good. We study the stationary subgame perfect equilibrium (SSPE) without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every SSPE without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some SSPE without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes.

Matching in the Kolm Triangle: Interiority and Participation Constraints of Matching Equilibria

In this paper we show how the Kolm triangle method, which is a standard tool for visualizing allocations in a public good economy, can also be used to provide a diagrammatical exposition of matching mechanisms and their effects on public good supply and welfare. In particular, we describe, on the one hand, for which income distributions interior matching equilibria result and, on the other hand, for which income distributions the agents voluntarily participate in a matching mechanism. As a novel result, we especially show that the “participation zone” is larger than the “interiority zone”.

Georg Simmel jako przewodnik po utopiach, w których rzeczy ludzi łączą, a nie dzielą

Artykuł przedstawia w szerokim kontekście relację wymiany według Georga Simmla jako podstawową formę życia społecznego. Zestawia wymianę dóbr z zarysem trzech wyszczególnionych przez siebie nurtów utopii, w których rzeczy ludzi łączą, a nie dzielą. Każdy z tych nurtów odrzuca wymianę towarową, przeciwstawiając jej reglamentowanie rzeczy we wspólnocie, odtowarowienie poprzez ich wymianę w charakterze darów oraz odwartościowanie (w sensie ekonomicznym) poprzez zapewnienie społeczeństwu ich obfitości. Pierwszemu nurtowi patronuje Platon w Prawach, drugiemu Arystoteles z koncepcją przyjaźni ze względu na korzyść, trzeciemu Francis Bacon jako autor Nowej Atlantydy – pierwszej utopii rządzonej przez ludzi nauki. Po kryzysie roku 2008 te trzy nurty zarysowały się ponownie w myśli społecznej, występując pod nazwą gospodarki dobra wspólnego, społeczeństwa postwzrostu, ekonomii współdzielenia, społeczeństwa krańcowych kosztów zerowych czy internetu przedmiotów. Według autora trzy wyróżnione przez niego w historii nurty odpowiadają dziś utopiom przedkapitalistycznym, „akapitalistycznym” i postkapitalistycznym. Simmlowska analiza instytucji wymiany pozwala uchwycić specyfikę dawnych projektów, a także wskazać na zasadnicze defekty uspołecznienia w nowych.

최적조세 모형을 이용한 지역 간 이주 유인 분석

최적조세 모형을 이용한 지역 간 이주 유인 분석

Demand for public good as a correspondence of cost shares

In this paper, I study optimal demand by an agent who faces a budget constraint that may not be linear. This situation arises in public good economies in which the production of the public good does not exhibit constant returns to scale and in which each agent is responsible for a fixed proportion of the cost of whatever quantity of the public good is provided. I define an agent’s demand for public good as a correspondence of the cost share so that I include economies in which production of public good exhibits constant returns to scale or the public good is perfectly substitutable by private good. I demonstrate that an agent’s demand for the public good decreases as their share of the costs increases and thus extend the law of demand beyond a setting in which agents pay personalized prices for the public good.

Bargaining Foundation for Ratio Equilibrium in Public Good Economies

We provide a bargaining foundation for the concept of ratio equilibrium in public good economies. We define a bargaining game of alternating offers in which players bargain to determine their cost shares of public good production and a level of public good. We study the stationary subgame perfect equilibrium without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every stationary subgame perfect equilibrium without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some stationary subgame perfect equilibrium without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes.

Securely implementable social choice functions in divisible and nonexcludable public good economies with quasi‐linear utility functions

AbstractThis paper studies the possibility of secure implementation (Saijo et al., 2007) in divisible and nonexcludable public good economies with quasi‐linear utility functions. In these economies, although Saijo et al. (2007) showed that the Groves mechanisms (Groves, 1973) are securely implementable when the valuation functions of the public good are (i) differentiable, concave, and (ii) identified with a real number, respectively, this paper shows the following negative result: securely implementable social choice functions are dictatorial or constant when the valuation functions of the public good are strictly increasing and strictly concave.

Existence of share equilibrium in symmetric local public good economies

Share equilibrium was introduced in van den Nouweland and Wooders (2011) as an extension of Lindahl’s original equilibrium concept (Lindahl, 1919) to local public good economies. The current paper contains a comprehensive study of the possible share equilibrium outcomes of symmetric individuals, exposing the forces that shape equilibrium and explaining the circumstances under which symmetric individuals can potentially have different equilibrium share indices. We provide an existence result for symmetric economies and a characterization of symmetric economies that admit share equilibria. We also establish equivalence between share equilibrium configurations in symmetric economies and core configurations in which the players all have the same utility.

Demand for Public Good As a Correspondence of Cost Shares

In this paper I study optimal demand by an agent who faces a budget constraint that may not be linear. This situation arises in public good economies in which production of the public good does not exhibit constant returns to scale and in which each agent is responsible for a fixed proportion of the cost of whatever quantity of the public good is provided. I define an agent's demand for public good as a correspondence of the cost share so that I include economies in which production of public good exhibits constant returns to scale or the public good is perfectly substitutable by private good. I demonstrate that an agent's demand for the public good decreases as their share of the costs increases and thus extend the law of demand beyond a setting in which agents pay personalized prices for the public good.

Existence of Share Equilibrium in Symmetric Local Public Good Economies

Share equilibrium was introduced in van den Nouweland and Wooders (2011) as an extension of Lindahl's original equilibrium concept (Lindahl, 1919) to local public good economies. The current paper contains a comprehensive study of the possible share equilibrium outcomes of symmetric individuals, exposing the forces that shape equilibrium and explaining the circumstances under which symmetric individuals can potentially have different equilibrium share indices. We provide an existence result for symmetric economies and a characterization of symmetric economies that admit share equilibria.

Agglomeration, Segregation, and Social Welfare in Group Formation Games

We consider a non cooperative game in which a continuum of heterogeneous individuals partition themselves into groups. A player's payoff depends on the group she chooses and the set of players who choose the same group as her.In the case of anonymous group externalities, we show that free mobility equilibria are socially optimal when group externalities vary logarithmically with community size. When they increase less (more) than logarithmically, the equilibrium partition exhibits excessive agglomeration (excessive fragmentation). In the case of nonanonymous group externalities, free mobility affects the size, but also the composition of groups. We characterize conditions under which free mobility equilibria are excessively or insufficiently segregated.When applied to local public goods economies, these results provide insights on the social welfare effect of free mobility as a function of the local public good technology, the income distribution, and the tax scheme.

Olson’s exploitation hypothesis in a public good economy: a reconsideration

Since the publication of Olson’s (1965) The Logic of Collective Action, the exploitation hypothesis, in which the rich shoulder the provision burden of public goods for the poor, has held sway despite empirical exceptions. To address such exceptions, we establish two alternative exploitation hypotheses based on contributors’ asymmetric preferences or on their productivity differences regarding the public good. The classic hypothesis and its two variants are proven in a novel fashion. For asymmetric preferences, we also establish the exploitation hypothesis for the joint products model with private and public co-benefits. Our theoretical insights are then illustrated by some empirical examples from the field of international public goods, such as military defense and cross-border pollution.

Existence of Share Equilibrium in Symmetric Local Public Good Economies

Share equilibrium was introduced in van den Nouweland and Wooders (2011) as an extension of ratio equilibrium to local public good economies. In that paper, we took an axiomatic approach to motivate share equilibrium. In the current paper we consider questions related to the existence of share equilibrium and we derive a necessary and sui¬ƒcient condition for the existence of share equilibrium in symmetric economies. Along the way, we develop a deeper understanding of the possible variation in share equilibrium by considering when symmetric players necessarily have the same share indices in equilibrium.

Benefits of growing potatoes under cover crops in a Mediterranean climate

We evaluated the impact of incorporating cover crops (CC) in commercial potato production, primarily to alleviate the severe soil erosion recorded in Mediterranean climate agriculture. As part of a 3-year study on this subject, we have developed complete agronomic management practices that enable sowing, growing and harvesting potatoes in soil covered with CC. This management scheme includes adjustment of specific management practices and farming machinery. In this paper, we explore the impact of including CC in potato production on runoff and soil erosion, weed suppression, and potato yield and quality. These are evaluated at the environmental, agronomic and economic levels. Our results clearly show that potato production under CC generates no yield reduction or nutrient deficiencies, reduces soil erosion by 95% and reduces runoff by more than 60%. Incorporation of CC in potato-growing practices also results in suppression of weeds (both species and biomass). The direct benefit to the grower from CC adoption is estimated at a 1.3% savings in variable costs of production. The benefit for the grower, along with additional environmental benefits translated to economic public goods calls for public intervention to support the transition from the conventional practices to CC practiced is essential.