IDEAS home Printed from
   My bibliography  Save this paper

Why And How Should The Government Finance Public Goods In Rural Areas? A Review Of Arguments


  • Petrick, Martin


This paper reviews three arguments why government should not directly finance public goods provision in the countryside: (1) sorting and voting of residents leads to efficient local public goods provision, (2) community governance may better cope with incomplete contracting in public goods, and (3) public provision drives out voluntary private provision of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the European or national level, and policy should focus on the institutional premises of public goods provision rather than on centralized payments to public good providers.

Suggested Citation

  • Petrick, Martin, 2006. "Why And How Should The Government Finance Public Goods In Rural Areas? A Review Of Arguments," 46th Annual Conference, Giessen, Germany, October 4-6, 2006 14961, German Association of Agricultural Economists (GEWISOLA).
  • Handle: RePEc:ags:gewi06:14961

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Theesfeld, Insa, 2004. "Constraints on Collective Action in a Transitional Economy: The Case of Bulgaria's Irrigation Sector," World Development, Elsevier, vol. 32(2), pages 251-271, February.
    3. Baland, Jean-Marie & Platteau, Jean-Philippe, 2000. "Halting Degradation of Natural Resources: Is There a Role for Rural Communities?," OUP Catalogue, Oxford University Press, number 9780198290612, June.
    4. Frey, Bruno S, 1997. "A Constitution for Knaves Crowds Out Civic Virtues," Economic Journal, Royal Economic Society, vol. 107(443), pages 1043-1053, July.
    5. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June.
    6. Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September.
    7. Robert D. Weaver, 1996. "Prosocial Behavior: Private Contributions to Agriculture's Impact on the Environment," Land Economics, University of Wisconsin Press, vol. 72(2), pages 231-247.
    8. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, March.
    9. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, vol. 93(5), pages 1648-1677, December.
    10. Eggers, Jorg & Laschewski, Lutz & Schleyer, Christian, 2004. "Agri-Environmental Policy in Germany: Understanding the Role of Regional Administration," Institutional Change in Agriculture and Natural Resources Discussion Papers 18832, Humboldt University Berlin, Department of Agricultural Economics.
    11. Ross, Stephen & Yinger, John, 1999. "Sorting and voting: A review of the literature on urban public finance," Handbook of Regional and Urban Economics,in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 47, pages 2001-2060 Elsevier.
    12. Wellisch,Dietmar, 2000. "Theory of Public Finance in a Federal State," Cambridge Books, Cambridge University Press, number 9780521630351, March.
    13. Diamond, Peter, 2006. "Optimal tax treatment of private contributions for public goods with and without warm glow preferences," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 897-919, May.
    Full references (including those not matched with items on IDEAS)


    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:ags:gewi06:14961. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.