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Pareto-Improving Redistribution and Pure Public Goods

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  • Cornes, Richard
  • Sandler, Todd

Abstract

In the pure public good model, the Nash equilibrium associated with one initial income distribution may Pareto dominate the equilibrium associated with another distribution of the same aggregate income. We explore this possibility and examine its implications for Pareto‐improving policy intervention by undertaking a comparative static analysis of Pareto‐improving tax‐financed increases in pure public good provision. Under some circumstances, a government can engineer policies that raise public good provision while increasing the well‐being of contributors and non‐contributors. Crucial factors promoting this outcome involve a large number of non‐contributors, a high marginal valuation for the public good by non‐contributors and a large aggregate response of contributors to changes in their income.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

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  • Cornes, Richard & Sandler, Todd, 2000. "Pareto-Improving Redistribution and Pure Public Goods," Staff General Research Papers Archive 1833, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:1833
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