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

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  • Petrick, Martin

    (Leibniz-Institute of Agricultural Development in Central and Eastern Europe and U of Wisconsin)

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 Paper Series 497, University of Wisconsin, Agricultural and Applied Economics.
  • Handle: RePEc:ecl:wisagr:497
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    File URL: http://www.aae.wisc.edu/pubs/sps/pdf/stpap497.pdf
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    References listed on IDEAS

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    13. 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.
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