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Should the Government Finance Public Goods in Rural Areas? A Review of Arguments

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Author Info
Petrick, Martin (Leibniz-Institute of Agricultural Development in Central and Eastern Europe and U of Wisconsin)

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Abstract

This 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 better copes with incomplete contracting in public goods, and (3) public provision drives out voluntary private provi-sion of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the national or Euro-pean level, and policy should focus on the institutional premises of public goods provi-sion rather than on centralized payments to public good providers.

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Paper provided by University of Wisconsin, Agricultural and Applied Economics in its series Staff Paper Series with number 497.

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Date of creation: Apr 2006
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Handle: RePEc:ecl:wisagr:497

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  1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416. [Downloadable!] (restricted)
  2. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, vol. 93(5), pages 1648-1677, December. [Downloadable!]
  3. Ross, Stephen & Yinger, John, 1999. "Sorting and voting: A review of the literature on urban public finance," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 47, pages 2001-2060 Elsevier. [Downloadable!] (restricted)
  4. David J. Lewis & Gary L. Hunt & DAndrew J. Plantinga, 2002. "Public Conservation Land and Employment Growth in the Northern Forest Region," Land Economics, University of Wisconsin Press, vol. 78(2), pages 245-259. [Downloadable!] (restricted)
  5. Diamond, Peter, 2006. "Optimal tax treatment of private contributions for public goods with and without warm glow preferences," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 897-919, May. [Downloadable!] (restricted)
  6. Frey, Bruno S, 1997. "A Constitution for Knaves Crowds Out Civic Virtues," Economic Journal, Royal Economic Society, vol. 107(443), pages 1043-53, July. [Downloadable!] (restricted)
  7. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June. [Downloadable!]
  8. Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September. [Downloadable!] (restricted)
  9. Robert D. Weaver, 1996. "Prosocial Behavior: Private Contributions to Agriculture's Impact on the Environment," Land Economics, University of Wisconsin Press, vol. 72(2), pages 231-247. [Downloadable!] (restricted)
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  1. Gramzow, Andreas, 2006. "Endogenous Initiatives As A Chance To Improve Rural Livelihood? Results Of A Case Study In Baltow, South-Eastern Poland," IAMO Discussion Papers 14900, Institute of Agricultural Development in Central and Eastern Europe (IAMO). [Downloadable!]
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