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The Role of Prices on Excludable Public Goods

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Author Info
Blomquist, Sören () (Department of Economics)
Christiansen, Vidar () (Department of Economics)
Abstract

When a public good is excludable it is possible to charge individuals for using the good. We study the role of prices on excludable public goods within an extension of the Stern-Stiglitz 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 an input should not be charged a positive price.

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Publisher Info
Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2001:14.

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Length: 24 pages
Date of creation: 15 Aug 2001
Date of revision:
Publication status: Published in International Tax and Public Finance, 2005, pages 61-79.
Handle: RePEc:hhs:uunewp:2001_014

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
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Fax: + 46 18 471 14 78
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Web page: http://www.nek.uu.se/
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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
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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References listed on IDEAS
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. 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 Group Munich. [Downloadable!]
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  5. Robin Boadway & Michael Keen, 1991. "Public Goods, Self-Selection and Optimal Income Taxation," Working Papers 828, Queen's University, Department of Economics.
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  6. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March. [Downloadable!] (restricted)
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  7. 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)
  8. 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)
  9. 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)
  10. 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. 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!]
  3. 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:
  4. Gilbert Metcalf & Jongsang Park, 2007. "A comment on the role of prices for excludable public goods," International Tax and Public Finance, Springer, vol. 14(6), pages 685-698, December. [Downloadable!] (restricted)
    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 Group Munich. [Downloadable!]
    Other versions:
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