Decentralizing Public Goods Production
Decentralized decisions, to a bureau with a given budget, about the production of public goods is analyzed within a general equilibrium model with a representative agent and no pure profits. Contrary to previous results on decentralization it is shown that sequential decentralization (i) does not necessarily imply aggregate production efficiency 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 characterized. Copyright 2008 Blackwell Publishing, Inc..
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Volume (Year): 10 (2008)
Issue (Month): 2 (04)
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