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Decentralising Public Goods Production

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  • Lundholm, Michael

    ()
    (Dept. of Economics, Stockholm University)

Abstract

Decentralised decisions, to a bureau with a given budget, about the production of public goods is analysed within a general equilibrium model with a representative agent and no pure profits. It is shown that decentralisation (i) does not necessarily imply aggregate production effciency and (ii) need not be optimal even if all public goods are neutral. Also, cost benefit criteria are derived and the marginal cost of public funds is characterised.

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Bibliographic Info

Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2004:6.

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Length: 21 pages
Date of creation: 24 May 2004
Date of revision:
Handle: RePEc:hhs:sunrpe:2004_0006

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Web page: http://www.ne.su.se/
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Keywords: Cost benefit criteria; marginal cost of public funds; production effciency; delegation; decentralisation.;

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References

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  1. Charles L. Ballard & Don Fullerton, 1993. "Distortionary Taxes and the Provision of Public Goods," NBER Working Papers 3506, National Bureau of Economic Research, Inc.
  2. Robin Boadway & Michael Keen, 1991. "Public Goods, Self-Selection and Optimal Income Taxation," Working Papers 828, Queen's University, Department of Economics.
  3. Joseph E. Stiglitz & Partha Dasgupta, 1970. "Differential Taxation, Public Goods, and Economic Efficiency," Cowles Foundation Discussion Papers 299, Cowles Foundation for Research in Economics, Yale University.
  4. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
  5. Atkinson, Anthony B & Stern, N H, 1974. "Pigou, Taxation and Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 41(1), pages 119-28, January.
  6. Besley, Timothy & Jewitt, Ian, 1991. "Decentralizing Public Good Supply," Econometrica, Econometric Society, vol. 59(6), pages 1769-78, November.
  7. Lau, Lawrence J & Sheshinski, Eytan & Stiglitz, Joseph E, 1978. "Efficiency in the Optimum Supply of Public Goods," Econometrica, Econometric Society, vol. 46(2), pages 269-84, March.
  8. Hansson, Ingemar, 1984. " Marginal Cost of Public Funds for Different Tax Instruments and Government Expenditures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 115-30.
  9. Gronberg, Timothy & Liu, Liqun, 2001. " The Second-Best Level of a Public Good: An Approach Based on the Marginal Excess Burden," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(4), pages 431-53.
  10. Gaube, Thomas, 2000. "When do distortionary taxes reduce the optimal supply of public goods?," Journal of Public Economics, Elsevier, vol. 76(2), pages 151-180, May.
  11. Christiansen, Vidar, 1981. "Evaluation of Public Projects under Optimal Taxation," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 447-57, July.
  12. Boadway, Robin & Horiba, Isao & Jha, Raghbendra, 1999. " The Provision of Public Services by Government Funded Decentralized Agencies," Public Choice, Springer, vol. 100(3-4), pages 157-84, September.
  13. Sandmo, Agnar, 1998. "Redistribution and the marginal cost of public funds," Journal of Public Economics, Elsevier, vol. 70(3), pages 365-382, December.
  14. Munk, Knud Jorgen, 1978. " Optimal Taxation and Pure Profit," Scandinavian Journal of Economics, Wiley Blackwell, vol. 80(1), pages 1-19.
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Cited by:
  1. Sacchi, Agnese & Salotti, Simone, 2014. "The asymmetric nature of fiscal decentralization: theory and practice," MPRA Paper 54506, University Library of Munich, Germany.
  2. Fabio Fiorillo & Agnese Sacchi, 2012. "The Political Economy of the Standard Level of Services: The Role of Income Distribution," CESifo Working Paper Series 3696, CESifo Group Munich.

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