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Should the Government Finance Public Goods in Rural Areas? A Review of Arguments

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  • Petrick, Martin

Abstract

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 better copes with incomplete contracting in public goods, and (3) public provision drives out voluntary private provi-sion of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the national or Euro-pean level, and policy should focus on the institutional premises of public goods provi-sion rather than on centralized payments to public good providers.

Suggested Citation

  • Petrick, Martin, 2006. "Should the Government Finance Public Goods in Rural Areas? A Review of Arguments," Staff Papers 12594, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    • Handle: RePEc:ags:wisagr:12594
    DOI: 10.22004/ag.econ.12594
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    1. Gramzow, Andreas, 2006. "Endogenous Initiatives As A Chance To Improve Rural Livelihood? Results Of A Case Study In Baltow, South-Eastern Poland," IAMO Discussion Papers 14900, Institute of Agricultural Development in Transition Economies (IAMO).
    2. Gramzow, Andreas, 2006. "Endogenous initiatives as a chance to improve rural livelihood? Results of a case study in Bal­tow, South-Eastern Poland [Tourismus als eine Möglichkeit zur Erhöhung des ländlichen Einkommens? Ergebnisse einer Fallstudie in Bałtów, Südostpolen]," IAMO Discussion Papers 95, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).

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