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Lindahl Pricing, Nonrival Infrastructure, and Endogenous Growth

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  • Dipankar Dasgupta

Abstract

The paper constructs a model of endogenous growth where infrastructure is an accumulable stock generating a nonrival input service. A typical market economy cannot attain the socially optimum steady state path, since nonrivalry precludes competitive pricing of infrastructure. However, there exist agent specific prices for the infrastructural service, a price for the infrastructural stock, a rate of interest, and a subsidy for the representative household that can sustain the optimal path as a dynamic Lindahl equilibrium. The rates of return from physical and infrastructural capital equal the rate of interest. Investment programs are socially optimum. The government's budget is balanced.

Suggested Citation

  • Dipankar Dasgupta, 2001. "Lindahl Pricing, Nonrival Infrastructure, and Endogenous Growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(4), pages 413-430, October.
    • Handle: RePEc:bla:jpbect:v:3:y:2001:i:4:p:413-430
    DOI: 10.1111/1097-3923.00076
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    Cited by:

    1. Chandril Bhattacharyya, 2016. "A note on endogenous growth with public capital," Economics Bulletin, AccessEcon, vol. 36(4), pages 2506-2518.
    2. Carine Nourry, 2012. "Dasgupta, D.: Modern growth theory," Journal of Economics, Springer, vol. 105(1), pages 97-100, January.
    3. Marchese, Carla & Privileggi, Fabio, 2014. "A Competitive Idea-Based Growth Model with Shrinking Workers' Income," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201415, University of Turin.
    4. repec:ebl:ecbull:v:5:y:2003:i:14:p:1-10 is not listed on IDEAS
    5. Dipankar Dasgupta & Koji Shimomura, 2006. "Public infrastructure, employment and sustainable growth in a small open economy with and without foreign direct investment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(3), pages 257-291.

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