Why And How Should The Government Finance Public Goods In Rural Areas? A Review Of Arguments
AbstractThis paper reviews three arguments why government should not directly finance public goods provision in the countryside: (1) sorting and voting of residents leads to efficient local public goods provision, (2) community governance may better cope with incomplete contracting in public goods, and (3) public provision drives out voluntary private provision of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the European or national level, and policy should focus on the institutional premises of public goods provision rather than on centralized payments to public good providers.
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Bibliographic InfoPaper provided by German Association of Agricultural Economists (GEWISOLA) in its series 46th Annual Conference, Giessen, Germany, October 4-6, 2006 with number 14961.
Date of creation: 2006
Date of revision:
Rural areas; public goods; institutions; agricultural policy reform; Public Economics;
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