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The Distributional Impact of Public Goods

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  • Richard D. Raymond
  • Michael Sesnowitz

Abstract

Aspects of the method developed by Aaron and McGuire and Maital (AMM) for estimating the benefit distributions associated with the provision of pure public goods are clarified and the method is extended to cover the case of public projects designed to improve the quality of impure public goods. The extended method is used to estimate the distributional impact of a proposed public project in the Cleveland-Akron metropolitan region, and the results are compared with estimates obtained from three naive models and from the AMM model for pure public goods. It is found that the native models overestimate substantially the net benefits received by low-income families and underestimate the net benefits received by high-income families. Using the AMM method for a pure public good similarly distorts the results, though by a much smaller magnitude.

Suggested Citation

  • Richard D. Raymond & Michael Sesnowitz, 1980. "The Distributional Impact of Public Goods," Public Finance Review, , vol. 8(4), pages 397-426, October.
    • Handle: RePEc:sae:pubfin:v:8:y:1980:i:4:p:397-426
    DOI: 10.1177/109114218000800402
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    References listed on IDEAS

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    1. Maital, Shlomo, 1973. "Public Goods and Income Distribution: Some Further Results," Econometrica, Econometric Society, vol. 41(3), pages 561-568, May.
    2. Maital, Shlomo, 1975. "Apportionment of Public Goods Benefits to Individuals," Public Finance = Finances publiques, , vol. 30(3), pages 397-416.
    3. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
    4. Brennan, Geoffrey, 1976. "Public Goods and Income Distribution: A Rejoinder to the Aaron-McGuire Reply," Econometrica, Econometric Society, vol. 44(2), pages 405-407, March.
    5. Brennan, Geoffrey, 1976. "The Distributional Implications of Public Goods," Econometrica, Econometric Society, vol. 44(2), pages 391-399, March.
    6. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-920, November.
    7. McGuire, Martin C & Aaron, Henry J, 1969. "Efficiency and Equity in the Optimal Supply of a Public Good," The Review of Economics and Statistics, MIT Press, vol. 51(1), pages 31-39, February.
    8. Burton A. Weisbrod, 1964. "Collective-Consumption Services of Individual-Consumption Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 78(3), pages 471-477.
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