Working Paper: NBER ID: w12535
Authors: Gilbert E. Metcalf; Jongsang Park
Abstract: Blomquist and Christensen (2005) argue that welfare is initially decreasing in the price of an excludable public good and that the case for a positive price for an excludable public good price is weak. We argue that this result follows from their particular characterization of the public good and that an alternative and equally reasonable characterization overturns their result. Hence the policy case for a positive price on the public good is stronger than Blomquist and Christiansen suggest. We also provide a flexible characterization of public goods that nests a wide variety of public goods models.
Keywords: No keywords provided
JEL Codes: H21; H41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| marginal valuation of an excludable public good (H41) | positive price on excludable public goods (H49) |
| positive price on excludable public goods (H49) | welfare increases (I38) |
| self-selection constraints in pricing mechanism (D40) | efficiency of public good pricing (H49) |
| g2 > g1 is necessary and sufficient for a positive price (D41) | positive price is Pareto improving (D61) |
| public good consumption (H41) | utility (L90) |