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  6. Samuelson Machines and the Optimal Public-Private Mix

Samuelson Machines and the Optimal Public-Private Mix

File(s)
Cornell_Dyson_wp0231.pdf (825.08 KB)
Permanent Link(s)
https://hdl.handle.net/1813/57885
Collections
Dyson School Working Papers
Author
Kanbur, Ravi
Clark, Simon
Abstract

Standard economic analysis assumes the sets of public and private goods to be exogenously given. Yet societies very often choose the public-private mix, using resources to convert seemingly private goods into ones with public goods characteristics and vice versa. And, in practice, we see a bewilderingly large variety of public-private mixes across societies. This papers advances an analysis of the choice of the public-private mix in the framework of voluntary contributions to public goods provision, by envisaging that, starting from a situation where all goods have private characteristics, some goods can be changed to have public goods characteristics at a cost (by purchasing a “Samuelson machine”). It characterizes the jointly optimal choice of the public-private mix and the efficient supply or not of the public goods in the mix. This characterization generates a number of testable predictions on the public-private mix, and on the prevalence of free riding.

Description
WP 2002-31 October 2002
JEL Classification Codes: D11; D61; H41
Date Issued
2002-10
Publisher
Charles H. Dyson School of Applied Economics and Management, Cornell University
Keywords
Public goods
•
public-private mix
•
Samuelson machine
•
cost of publicness
Type
article

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