Excludable and Non-Excludable Public Inputs: Consequences for Economic Growth

40 Pages Posted: 8 Mar 2005

See all articles by Ingrid Ott

Ingrid Ott

University of Lueneburg - Department of Economics

Stephen J. Turnovsky

University of Washington - Institute for Economic Research; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2005

Abstract

Many public goods are characterized by rivalry and/or excludability. This paper introduces both non-excludable and excludable public inputs into a simple endogenous growth model. We derive the equilibrium growth rate and design the optimal tax and user-cost structure. Our results emphasize the role of congestion in determining this optimal financing structure and the consequences this has in turn for the government's budget. The latter consists of fee and tax revenues that are used to finance the entire public production input and that may or may not suffice to finance the entire public input, depending upon the degree of congestion. We extend the model to allow for monopoly pricing of the user fee by the government. Most of the analysis is conducted for general production functions consistent with endogenous growth, although the case of CES technology is also considered.

Keywords: excludable and non-excludable public goods, congestion, growth

JEL Classification: H21, H40, O40

Suggested Citation

Ott, Ingrid and Turnovsky, Stephen J., Excludable and Non-Excludable Public Inputs: Consequences for Economic Growth (March 2005). Available at SSRN: https://ssrn.com/abstract=680442 or http://dx.doi.org/10.2139/ssrn.680442

Ingrid Ott

University of Lueneburg - Department of Economics ( email )

Akademisches Auslandsamt
D-21332 Luneburg
Germany

Stephen J. Turnovsky (Contact Author)

University of Washington - Institute for Economic Research ( email )

Seattle, WA 98195
United States
206-685-8028 (Phone)
206-543-5955 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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