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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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number
2004:6.
Length: 21 pages Date of creation: 24 May 2004 Date of revision: Handle: RePEc:hhs:sunrpe:2004_0006
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