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Optimal public goods provision: implications of endogenizing the labor/leisure choice

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  • Flores, Nicholas E.
  • Graves, Philip E.

Abstract

Conventional analysis of public goods provision aggregates individual willinness to pay while treating income as exogenous, ignoring the fact that we generate income to allow us to purchase utility-generating goods. We explore the implications of endogenizing the laborl/leisure decision by explicitly considering leisure demand in a model of public goods provision. We consider benefit analysis of public goods provision and find that increments of the public good will generally be under-valued using conventional analysis while decrements to the public good (rare in public good settings) will be overvalued.

Suggested Citation

  • Flores, Nicholas E. & Graves, Philip E., 2008. "Optimal public goods provision: implications of endogenizing the labor/leisure choice," MPRA Paper 19923, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19923
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    References listed on IDEAS

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    1. J. R. Hicks, 1943. "The Four Consumer's Surpluses," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 11(1), pages 31-41.
    2. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
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    Cited by:

    1. Delis, Manthos D. & Iosifidi, Maria, 2020. "Environmentally aware households," Economic Modelling, Elsevier, vol. 88(C), pages 263-279.
    2. Graves Philip E, 2009. "A Note on the Valuation of Collective Goods: Overlooked Input Market Free Riding for Non-Individually Incrementable Goods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-20, February.
    3. Graves, Philip E., 2012. "Benefit-Cost Analysis of Environmental Projects: A Plethora of Biases Understating Net Benefits," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 3(3), pages 1-25, August.
    4. Philip E. Graves, 2011. "Appropriate Fiscal Policy over the Business Cycle: Proper Stimulus Policies Can Work," The IUP Journal of Governance and Public Policy, IUP Publications, vol. 0(2), pages 26-32, June.
    5. Philip E. Graves, 2010. "Benefit-Cost Analysis of Environmental Projects: A Plethora of Systematic Biases," CESifo Working Paper Series 3144, CESifo.
    6. Graves, Philip E., 2017. "Implications of global warming: Two eras," World Development Perspectives, Elsevier, vol. 7, pages 9-14.
    7. Graves, Philip E., 2017. "Global Climate Policy Will Have Net Benefits Larger Than Anyone Thinks (and Welfare Gains, Strangely, Are Likely To Be Much Larger Yet)," Ecological Economics, Elsevier, vol. 136(C), pages 73-76.

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    More about this item

    Keywords

    environmental economics; willingness-to-pay; willingness-to-accept; valuation; public goods; public goods provision; benefit-cost analysis;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • H4 - Public Economics - - Publicly Provided Goods
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • A1 - General Economics and Teaching - - General Economics
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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