IDEAS home Printed from https://ideas.repec.org/a/spr/etbull/v7y2019i1d10.1007_s40505-018-0150-y.html
   My bibliography  Save this article

Demand for public good as a correspondence of cost shares

Author

Listed:
  • A. van den Nouweland

    (University of Oregon)

Abstract

In this paper, I study optimal demand by an agent who faces a budget constraint that may not be linear. This situation arises in public good economies in which the production of the public good does not exhibit constant returns to scale and in which each agent is responsible for a fixed proportion of the cost of whatever quantity of the public good is provided. I define an agent’s demand for public good as a correspondence of the cost share so that I include economies in which production of public good exhibits constant returns to scale or the public good is perfectly substitutable by private good. I demonstrate that an agent’s demand for the public good decreases as their share of the costs increases and thus extend the law of demand beyond a setting in which agents pay personalized prices for the public good.

Suggested Citation

  • A. van den Nouweland, 2019. "Demand for public good as a correspondence of cost shares," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(1), pages 155-164, May.
    • Handle: RePEc:spr:etbull:v:7:y:2019:i:1:d:10.1007_s40505-018-0150-y
    DOI: 10.1007/s40505-018-0150-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40505-018-0150-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40505-018-0150-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    References listed on IDEAS

    as
    1. Constanze Binder & Giulio Codognato & Miriam Teschl & Yongsheng Xu, 2015. "Individual and Collective Choice and Social Welfare," Post-Print hal-01457320, HAL.
    2. Robert T. Jensen & Nolan H. Miller, 2008. "Giffen Behavior and Subsistence Consumption," American Economic Review, American Economic Association, vol. 98(4), pages 1553-1577, September.
    3. Constanze Binder & Giulio Codognato & Miriam Teschl & Yongsheng Xu (ed.), 2015. "Individual and Collective Choice and Social Welfare," Studies in Choice and Welfare, Springer, edition 127, number 978-3-662-46439-7, December.
    4. van den Nouweland, A. & Wooders, M., 2017. "Existence of share equilibrium in symmetric local public good economies," Mathematical Social Sciences, Elsevier, vol. 89(C), pages 50-60.
    5. van den Nouweland, Anne & Wooders, Myrna, 2011. "Share equilibrium in local public good economies," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 376-381.
    6. Anne Nouweland, 2015. "Lindahl and Equilibrium," Studies in Choice and Welfare, in: Constanze Binder & Giulio Codognato & Miriam Teschl & Yongsheng Xu (ed.), Individual and Collective Choice and Social Welfare, edition 127, pages 335-362, Springer.
    Full references (including those not matched with items on IDEAS)

    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. Anne van den Nouweland & Agnieszka Rusinowska, 2020. "Bargaining foundation for ratio equilibrium in public‐good economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(2), pages 302-319, April.
    2. Maxime Desmarais-Tremblay, 2017. "Paternalism and the public household. On the domestic origins of public economics," Documents de travail du Centre d'Economie de la Sorbonne 17032, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Francesca Busetto & Giulio Codognato & Simone Tonin, 2018. "Kalai and Muller’s possibility theorem: a simplified integer programming version," Review of Economic Design, Springer;Society for Economic Design, vol. 22(3), pages 149-157, December.
    4. Busetto, Francesca & Codognato, Giulio & Tonin, Simone, 2018. "Integer programming on domains containing inseparable ordered pairs," Research in Economics, Elsevier, vol. 72(4), pages 428-434.
    5. Adrian Miroiu, 2018. "Single-profile axiomatizations of the plurality and the simple majority rules," Economics Bulletin, AccessEcon, vol. 38(1), pages 13-19.
    6. M. Remzi Sanver, 2017. "Nash implementing social choice rules with restricted ranges," Review of Economic Design, Springer;Society for Economic Design, vol. 21(1), pages 65-72, March.
    7. Adrian Miroiu, 2020. "Coalitions of concerned voters: a characterization of the majority rule," Economics Bulletin, AccessEcon, vol. 40(4), pages 2717-2722.
    8. Francesca Busetto & Giulio Codognato & Simone Tonin, 2017. "Nondictatorial Arrovian Social Welfare Functions, Simple Majority Rule and Integer Programming," Working Papers 2017_11, Durham University Business School.
    9. Can, Zeynep Gizem & O'Donoghue, Cathal & Sologon, Denisa Maria & Smith, Darius & Griffin, Rosaleen & Murray, Una, 2023. "Modelling the Distributional Effects of the Cost-of-Living Crisis in Turkey and the South Caucasus: A Microsimulation Analysis," IZA Discussion Papers 16619, Institute of Labor Economics (IZA).
    10. Sproule, Robert & Karras, Michael, 2022. "A Precondition-Free Demonstration That the Wold-Juréen (1953) Utility Function (Always) Generates a Giffen Good," MPRA Paper 113005, University Library of Munich, Germany.
    11. Franks, Edwin & Bryant, William D.A., 2017. "The Uncompensated Law of Demand: A ‘Revealed Preference’ approach," Economics Letters, Elsevier, vol. 152(C), pages 105-111.
    12. Mérel, Pierre & Ortiz-Bobea, Ariel & Paroissien, Emmanuel, 2021. "How big is the “lemons” problem? Historical evidence from French wines," European Economic Review, Elsevier, vol. 138(C).
    13. Lin, Jessie & Gupta, Anubhab, 2022. "Implications of Farm Size and Staple Production on Rural and Urban Food Security and Dietary Diversity," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321161, Agricultural Economics Society - AES.
    14. Anna D'Souza & Dean Jolliffe, 2012. "Rising Food Prices and Coping Strategies: Household-level Evidence from Afghanistan," Journal of Development Studies, Taylor & Francis Journals, vol. 48(2), pages 282-299, August.
    15. Basu, Karna & Wong, Maisy, 2015. "Evaluating seasonal food storage and credit programs in east Indonesia," Journal of Development Economics, Elsevier, vol. 115(C), pages 200-216.
    16. Kornher, Lukas & Kalkuhl, Matthias, 2013. "Food Price Volatility in Developing Countries and its Determinants," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(4), pages 1-32, November.
    17. Nikhil Garg & Ashish Goel & Benjamin Plaut, 2021. "Markets for public decision-making," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(4), pages 755-801, May.
    18. Orazio Attanasio & Elena Pastorino, 2020. "Nonlinear Pricing in Village Economies," Econometrica, Econometric Society, vol. 88(1), pages 207-263, January.
    19. Manipushpak Mitra & Debapriya Sen, 2022. "A microeconomic analysis of subsistence," Indian Economic Review, Springer, vol. 57(2), pages 301-320, December.
    20. Le Van, Cuong & Pham, Ngoc-Sang, 2020. "Demand and equilibrium with inferior and Giffen behaviors," Mathematical Social Sciences, Elsevier, vol. 103(C), pages 45-50.

    More about this item

    Keywords

    Cost shares; Public good; Law of demand; Giffen good;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

    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:spr:etbull:v:7:y:2019:i:1:d:10.1007_s40505-018-0150-y. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.