Shadow-Pricing Interpretation of the Pigovian Rule for the Optimal Provision of Public Goods: A Note

Posted: 30 May 2002

See all articles by Atsushi Tsuneki

Atsushi Tsuneki

Osaka University - Institute of Social and Economic Research (ISER)

Abstract

The Pigovian rule for the optimal public goods provision with distortionary taxation is given a new interpretation. It relates the Pigovian rule to project evaluation rules in terms of shadow prices. Our formula for the Pigovian rule is compared with that given by existing literature for cases in which commodity taxes are set optimally to articulate the implications of their results. This approach also renders a clear insight on the nature of resource allocation and income redistribution effect involved in the public goods provision in a heterogeneous-consumers economy.

Keywords: Pigovian rule, public goods, project evaluation, shadow prices

Suggested Citation

Tsuneki, Atsushi, Shadow-Pricing Interpretation of the Pigovian Rule for the Optimal Provision of Public Goods: A Note. Available at SSRN: https://ssrn.com/abstract=312790

Atsushi Tsuneki (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

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