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One-Sided Private Provision of Public Goods with Implicit Lindahl Pricing

  • Volker Meier

    ()

We consider a sequential game in which one player produces a public good and the other player can influence this decision by making an unconditional transfer. An efficient allocation requires the Lindahl property: the sum of the two (implicit) individual prices has to be equal to the resource cost of the public good. Under mild conditions this requires a personal price for the providing player that lies below half of the resource cost. These results can, for example, justify high marginal taxes on wages of secondary earners.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-12/cesifo1_wp3295.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3295.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3295
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  1. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
  2. Rob, Rafael, 1989. "Pollution claim settlements under private information," Journal of Economic Theory, Elsevier, vol. 47(2), pages 307-333, April.
  3. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
  4. Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 589-614.
  5. Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, vol. 20(3), pages 281-297, April.
  6. Myles,Gareth D., 1995. "Public Economics," Cambridge Books, Cambridge University Press, number 9780521497695.
  7. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, vol. 46(1), pages 121-159, December.
  8. Meier, Volker & Rainer, Helmut, 2012. "On the optimality of joint taxation for noncooperative couples," Munich Reprints in Economics 19177, University of Munich, Department of Economics.
  9. Danziger, Leif & Schnytzer, Adi, 1991. "Implementing the Lindahl voluntary-exchange mechanism," European Journal of Political Economy, Elsevier, vol. 7(1), pages 55-64, April.
  10. Martimort, David & Moreira, Humberto, 2010. "Common agency and public good provision under asymmetric information," Theoretical Economics, Econometric Society, vol. 5(2), May.
  11. Althammer, Wilhelm & Buchholz, Wolfgang, 1993. "Lindahl-equilibria as the outcome of a non-cooperative game : A reconsideration," European Journal of Political Economy, Elsevier, vol. 9(3), pages 399-405, August.
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