IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v69y1979i3p420-22.html
   My bibliography  Save this article

The Arrow-Lind Theorem in a Continuum Economy

Author

Listed:
  • Gardner, Roy

Abstract

In their stimulating contribution to the theory of cost-benefit analysis, Arrow and Lind showed that "when the risks associated with a public investment are publicly borne, the total cost of risk bearing is insignificant and, therefore, the government should ignore uncertainty in evaluating public investments... This result is obtained not because the government is able to pool investments but because the government distributes the risk associated with any investment among a large number of people. It is the risk-spreading aspect of government investment that is essential to this result." Arrow and Lind proved their result from an asymptotic point of view, letting the number of taxpayers grow infinitely large.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Gardner, Roy, 1979. "The Arrow-Lind Theorem in a Continuum Economy," American Economic Review, American Economic Association, vol. 69(3), pages 420-422, June.
    • Handle: RePEc:aea:aecrev:v:69:y:1979:i:3:p:420-22
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0002-8282%28197906%2969%3A3%3C420%3ATATIAC%3E2.0.CO%3B2-X&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kenneth J. Arrow & Robert C. Lind, 1974. "Uncertainty and the Evaluation of Public Investment Decisions," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 3, pages 54-75, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ghesquiere, Francis & Mahul, Olivier, 2007. "Sovereign natural disaster insurance for developing countries : a paradigm shift in catastrophe risk financing," Policy Research Working Paper Series 4345, The World Bank.
    2. Gozzi, Juan Carlos & Schmukler, Sergio, 2016. "Public Credit Guarantees and Access to Finance," Economic Research Papers 269324, University of Warwick - Department of Economics.
    3. Jock R. Anderson, 1983. "On Risk Deductions In Public Project Appraisal," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 27(3), pages 231-239, December.
    4. Dionne, Georges, 1981. "Le risque moral et la sélection adverse : une revue critique de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 57(2), pages 193-224, avril-jui.
    5. Anderson, J.R., 1989. "Forecasting, uncertainty, and public project appraisal," Policy Research Working Paper Series 154, The World Bank.
    6. Spackman, Michael, 2002. "Public-private partnerships: lessons from the British approach," Economic Systems, Elsevier, vol. 26(3), pages 283-301, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eduardo Fernández-Arias & Ricardo Hausmann & Ugo Panizza, 2020. "Smart Development Banks," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 395-420, June.
    2. Simon Eckermann & Andrew R. Willan, 2016. "Expected Value of Sample Information with Imperfect Implementation," Medical Decision Making, , vol. 36(3), pages 282-283, April.
    3. Birgitte Grøgaard & Asmund Rygh & Gabriel R. G. Benito, 2019. "Bringing corporate governance into internalization theory: State ownership and foreign entry strategies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1310-1337, October.
    4. Rausser, Gordon C. & de Janvry, Alain & Schmitz, Andrew & Zilberman, David D., 1980. "Principal issues in the evaluation of public research in agriculture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt74v9m7dh, Department of Agricultural & Resource Economics, UC Berkeley.
    5. Reinhard Mechler & Stefan Hochrainer & Asbjørn Aaheim & Håkon Salen & Anita Wreford, 2010. "Modelling economic impacts and adaptation to extreme events: Insights from European case studies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 15(7), pages 737-762, October.
    6. Nathalie Berta, 2016. "On the definition of externality as a missing market," Post-Print halshs-01277990, HAL.
    7. Cristiano Antonelli, 2017. "The derived demand for knowledge," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 183-194, February.
    8. Bruno CRUZ & Aude POMMERET, 2002. "Does public investment reduce private investment risk ? A real option approach," LIDAM Discussion Papers IRES 2002039, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. Tirelli, Mario, 2006. "The evaluation of public investments under uncertainty," Research in Economics, Elsevier, vol. 60(4), pages 188-198, December.
    10. Gollier, Christian, 2016. "Gamma discounters are short-termist," Journal of Public Economics, Elsevier, vol. 142(C), pages 83-90.
    11. Edward C. F. Wilson & Miranda Mugford & Garry Barton & Lee Shepstone, 2016. "Efficient Research Design," Medical Decision Making, , vol. 36(3), pages 335-348, April.
    12. Gray, Richard S., 1990. "The Role of Learning in Investment Decisions," 1990 Annual meeting, August 5-8, Vancouver, Canada 261490, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Carsten Helm, 1998. "International Cooperation Behind the Veil of Uncertainty – The Case of Transboundary Acidification," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(2), pages 185-201, September.
    14. Yuri Biondi, 2009. "Capital budgeting under relational contracting: optimal ranking and duration criteria for schemes of concession, project-financing and public-private partnership," Post-Print hal-00404305, HAL.
    15. Augusto de la Torre & Alain Ize, 2010. "Containing Systemic Risk: Paradigm-Based Perspectives on Regulatory Reform," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2010), pages 25-64, August.
    16. HEIFETZ, Aviad & MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1999. "Arbitrage and equilibrium with exchangeable risks," LIDAM Discussion Papers CORE 1999046, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Stiglitz, Joseph E., 2018. "Pareto efficient taxation and expenditures: Pre- and re-distribution," Journal of Public Economics, Elsevier, vol. 162(C), pages 101-119.
    18. Asmund Rygh & Gabriel R. G. Benito, 2022. "Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1155-1181, December.
    19. Laszlo Goerke, 2011. "Commodity tax structure under uncertainty in a perfectly competitive market," Journal of Economics, Springer, vol. 103(3), pages 203-219, July.
    20. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Public-Private Partnerships : Risk Allocation and Value for Money," Other publications TiSEM b9218010-a357-4c0a-805a-7, Tilburg University, School of Economics and Management.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:69:y:1979:i:3:p:420-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.