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The Role of Prices on Excludable Public Goods

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Author Info
Soeren Blomquist ()
Vidar Christiansen ()

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Abstract

When a poublic good ist excludable it is possible to charge individuals for using the good. We study the role of prices on excludable public goods using an extension of the Stiglitz-Stern version of the Mirrlees optimal income tax model. Our discussion includes both the case where the public good is a final consumer good and the case where it is an intermediate good. We demonstrate that for a public consumer good charging a positive price may be desirable, but only under certain conditions. However, charging a lower than optimal price may be less efficient than setting a zero price. Conditions are identified under which consumers should be rationed in their demand rather than adjusting demand to price. We also conclude that producers using an intermediate public good as input should not be charged a positive price.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 536.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_536

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Related research
Keywords: excludable public goods public sector pricing information constrained Pareto efficiency

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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

References listed on IDEAS
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  1. Oakland, William H, 1974. "Public Goods, Perfect Competition, and Underproduction," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 927-39, Sept./Oct. [Downloadable!] (restricted)
  2. Brito, Dagobert L & Oakland, William H, 1980. "On the Monopolistic Provision of Excludable Public Goods," American Economic Review, American Economic Association, vol. 70(4), pages 691-704, September. [Downloadable!] (restricted)
  3. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Blackwell Publishing, vol. 38(114), pages 175-208, April. [Downloadable!] (restricted)
  4. Soeren Blomquist & Vidar Christiansen, 2001. "The Role of Prices on Excludable Public Goods," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  5. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March. [Downloadable!] (restricted)
    Other versions:
  6. Fraser, Clive D., 1996. "On the provision of excludable public goods," Journal of Public Economics, Elsevier, vol. 60(1), pages 111-130, April. [Downloadable!] (restricted)
  7. Burns, Michael E & Walsh, Cliff, 1981. "Market Provision of Price-excludable Public Goods: A General Analysis," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 166-91, February. [Downloadable!] (restricted)
  8. Christiansen, Vidar, 1984. "Which commodity taxes should supplement the income tax?," Journal of Public Economics, Elsevier, vol. 24(2), pages 195-220, July. [Downloadable!] (restricted)
  9. Stern, Nicholas, 1982. "Optimum taxation with errors in administration," Journal of Public Economics, Elsevier, vol. 17(2), pages 181-211, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hellwig, Martin, 2004. "Optimal Income Taxation, Public-Goods Provision," Sonderforschungsbereich 504 Publications 04-42, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
  2. Gilbert E. Metcalf & Jongsang Park, 2006. "A Comment on The Role of Prices for Excludable Public Goods," NBER Working Papers 12535, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Martin Hellwig, 2004. "Optimal Income Taxation, Public-Goods Provision and Public-Sector Pricing: A Contribution to the Foundations of Public Economics," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2004_14, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  4. Blomquist, Sören & Christiansen, Vidar, 2001. "The Role of Prices on Excludable Public Goods," Working Paper Series 2001:14, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  5. Bernd Huber & Marco Runkel, 2004. "Tax Competition, Excludable Public Goods and User Charges," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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