Pareto Improving Interventions in a General Equilibrium Model with Private Provision of Public Goods

27 Pages Posted: 3 Jan 2005

See all articles by Antonio Villanacci

Antonio Villanacci

University of Florence

Ünal Zenginobuz

Bogazici University - Department of Economics; Bogazici University - Center for Economic Design (CED)

Multiple version iconThere are 2 versions of this paper

Date Written: December 9, 2004

Abstract

Most of the literature on government intervention in models where public goods are provided through voluntary contributions focuses on interventions that change the total level of a public good, which is known to be (almost always) underprovided relative to the "efficient" level. However, increases in the public good level need not always benefit all with respect to the private provision equilibrium outcomes. It is evident that interventions that increase the welfare level of all involved will be more desirable from a public policy implementation point of view. In this paper, we take a direct approach to welfare properties of private provision equilibria for public goods in a full blown general equilibrium and study interventions that have the goal of Pareto improving on the private provision ("market") outcome. Specifically, we study two types of policies that typically achieve that aim: (i) along with private firms, the government produces the public good, using one of the available technologies and financing input costs by taxes on households; (ii) taxes are imposed on firms and households.

Keywords: general equilibrium, public goods, Pareto improving interventions

JEL Classification: H41, H49, H50

Suggested Citation

Villanacci, Antonio and Zenginobuz, Ünal, Pareto Improving Interventions in a General Equilibrium Model with Private Provision of Public Goods (December 9, 2004). Available at SSRN: https://ssrn.com/abstract=637662 or http://dx.doi.org/10.2139/ssrn.637662

Antonio Villanacci (Contact Author)

University of Florence ( email )

Piazza di San Marco, 4
Florence, 50121
Italy
(055) 4223944 (Fax)

Ünal Zenginobuz

Bogazici University - Department of Economics ( email )

Bebek
Istanbul, TR 34342
Turkey
+90 212 359 65 05 (Phone)
+90 212 287 24 53 (Fax)

HOME PAGE: http://www.econ.boun.edu.tr/zobuz

Bogazici University - Center for Economic Design (CED) ( email )

Bogazici University
P.K. 2 Bebek
Istanbul, 34342
Turkey
+90 212 287 24 76 (Phone)
+90 212 287 24 53 (Fax)

HOME PAGE: http://www.ced.boun.edu.tr

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