Public Good Menus and Feature Complementarity
The distance metric on the location space for multidimensional public good varieties represents complementarity between the goods features. "Euclidean" feature complementarity has atypical strong properties that lead to a failure of intuition about the optimal-menu design problem. If the population is heterogeneous, increasing the distance between two varieties is welfare-improving in Euclidean space, but not generally. A basic optimal-direction principle always applies: "anticonvex" menu changes increase participation and surplus. A menu replacement is anticonvex if it moves the varieties apart in the common line space. The result extends to some impure public goods with break-even pricing and variety-specic costs. A sufficient condition for menus to be Pareto-optimal is that "personal price" (nominal price plus perceived distance from a variety) is linear in the norm that induces the distance metric.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia|
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
Web page: http://fbe.unimelb.edu.au/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ehlers, Lars, 2001. "Independence axioms for the provision of multiple public goods as options," Mathematical Social Sciences, Elsevier, vol. 41(2), pages 239-250, March.
- Michael L. Katz, 1980. "Multiplant Monopoly in a Spatial Market," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 519-535, Autumn.
- Ehlers, Lars, 2002.
"Multiple public goods and lexicographic preferences: replacement principle,"
Journal of Mathematical Economics,
Elsevier, vol. 37(1), pages 1-15, February.
- EHLERS, Lars, 2001. "Multiple Public Goods and Lexicographic Preferences Replacement Principle," Cahiers de recherche 2001-25, Universite de Montreal, Departement de sciences economiques.
- Ehlers, L., 2001. "Multiple Public Goods and Lexicographic Preferences Replacement Principle," Cahiers de recherche 2001-25, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Voorneveld, Mark & van den Nouweland, Anne & McLean, Rich, 2008. "An axiomatization of the Euclidean compromise solution," SSE/EFI Working Paper Series in Economics and Finance 703, Stockholm School of Economics.
- Ehlers, Lars, 2003. "Multiple public goods, lexicographic preferences, and single-plateaued preference rules," Games and Economic Behavior, Elsevier, vol. 43(1), pages 1-27, April.
- Pal, Debashis & Sarkar, Jyotirmoy, 2002. "Spatial competition among multi-store firms," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 163-190, February.
- Andreas Pfingsten & Andreas Wagener, 2003. "Bargaining Solutions as Social Compromises," Theory and Decision, Springer, vol. 55(4), pages 359-389, December.
- Carlo Perroni & Kimberley A. Scharf, 2001.
"Tiebout with Politics: Capital Tax Competition and Constitutional Choices,"
Review of Economic Studies,
Oxford University Press, vol. 68(1), pages 133-154.
- Carlo Perroni & Kimberley A. Scharf, . "Tiebout with Politics: Capital Tax Competition and Constitutional Choices," EPRU Working Paper Series 97-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Eiichi Miyagawa, 2001. "Locating libraries on a street," Social Choice and Welfare, Springer, vol. 18(3), pages 527-541.
- Lerer, Ehud & Nitzan, Shmuel, 1985. "Some general results on the metric rationalization for social decision rules," Journal of Economic Theory, Elsevier, vol. 37(1), pages 191-201, October.
When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:962. 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: (Katherine Perez)
If references are entirely missing, you can add them using this form.