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On the Creation and Destruction of Public Goods: The Matter of Sequencing

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  • Carson, Richard T.
  • Flores, Nicholas E.
  • Hanemann, W. Michael

Abstract

We consider sequences where a subset of public goods are systematically being created or destroyed. For the case of strict Hicksian substitutes between all pairs of this subset of public goods, we show that willingness to pay for an increase in a particular public good is strictly decreasing the farther out in a sequence it is valued. For the destruction of public goods the reverse is true for willingness to accept compensation. Thus, sequencing has opposite implications for the assessment of the benefits of providing public goods and for the assessment of the damages from destroying them.

Suggested Citation

  • Carson, Richard T. & Flores, Nicholas E. & Hanemann, W. Michael, 1993. "On the Creation and Destruction of Public Goods: The Matter of Sequencing," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7x41w3r3, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt7x41w3r3
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    References listed on IDEAS

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    1. Madden, Paul, 1991. "A Generalization of Hicksian q Substitutes and Complements with Application to Demand Rationing," Econometrica, Econometric Society, vol. 59(5), pages 1497-1508, September.
    2. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-647, June.
    3. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    4. Hoehn, John P & Randall, Alan, 1989. "Too Many Proposals Pass the Benefit Cost Test," American Economic Review, American Economic Association, vol. 79(3), pages 544-551, June.
    5. John P. Hoehn, 1991. "Valuing the Multidimensional Impacts of Environmental Policy: Theory and Methods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 289-299.
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    Cited by:

    1. Alexandra K. Shannon & Faraz Usmani & Subhrendu K. Pattanayak & Marc Jeuland, 2019. "The Price of Purity: Willingness to Pay for Air and Water Purification Technologies in Rajasthan, India," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1073-1100, August.

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