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Economies of Scope and Multiproduct Clubs

Author

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  • Jan K. Brueckner

    (University of Illinois at Urbana-Champaign)

  • Kangoh Lee

    (Towson State University)

Abstract

This article addresses the potential optimality of joint provision of multiple public goods when the joint cost function of such goods exhibits economies of scope. On one hand, the joint provision of public goods in multiproduct clubs leads to cost savings under economies of scope. However, there is an efficiency loss from such clubs because consumption group sizes cannot be set individually for each good. The article analyzes these costs and benefits and derives conditions under which multiproduct clubs are desirable.

Suggested Citation

  • Jan K. Brueckner & Kangoh Lee, 1991. "Economies of Scope and Multiproduct Clubs," Public Finance Review, , vol. 19(2), pages 193-208, April.
    • Handle: RePEc:sae:pubfin:v:19:y:1991:i:2:p:193-208
    DOI: 10.1177/109114219101900204
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    References listed on IDEAS

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    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, vol. 18(4), pages 1481-1521, December.
    3. Scotchmer, Suzanne & Wooders, Myrna Holtz, 1987. "Competitive equilibrium and the core in club economies with anonymous crowding," Journal of Public Economics, Elsevier, vol. 34(2), pages 159-173, November.
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    Cited by:

    1. Todd Sandler, 2013. "Buchanan clubs," Constitutional Political Economy, Springer, vol. 24(4), pages 265-284, December.
    2. Glazer, Amihai & Niskanen, Esko & Scotchmer, Suzanne, 1997. "On the uses of club theory: Preface to the club theory symposium," Journal of Public Economics, Elsevier, vol. 65(1), pages 3-7, July.
    3. Lipsman, Michael Aaron, 1994. "A theory of transportation clubs with special application to the domestic aviation system," ISU General Staff Papers 1994010108000012284, Iowa State University, Department of Economics.
    4. Tsukahara, Kenichi, 1995. "Independent and joint provision of optional public services," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 411-425, August.
    5. Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear‐Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63, March.
    6. Lars-Erik Borge, 1996. "The Behavior of Bureaucrats and the Choice Between Single-Purpose and Multi-Purpose Authorities," Public Finance Review, , vol. 24(2), pages 173-191, April.
    7. Silva, Emilson C. D., 1997. "A-la-Carte or Smorgasbord? Multiproduct Clubs with Costly Exclusion," Journal of Urban Economics, Elsevier, vol. 41(2), pages 264-280, March.
    8. Wohlgemuth, Michael, 2011. "The boundaries of the state," Freiburg Discussion Papers on Constitutional Economics 11/3, Walter Eucken Institut e.V..

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