IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v89y2005i11-12p1981-2003.html
   My bibliography  Save this article

A utilitarian approach to the provision and pricing of excludable public goods

Author

Listed:
  • Hellwig, Martin F.

Abstract

The paper studies utilitarian welfare maximization in a model with an excludable public good where individual preferences are private information. If inequality aversion is large, optimal allocations involve the use of admission fees and exclusion to redistribute resources from people who benefit a lot from the public good to people who benefit little. If inequality aversion is close to zero, optimal admission fees are zero. These results are robust if earning abilities provide an additional source of heterogeneity and income taxation an additional policy instrument.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
    • Handle: RePEc:eee:pubeco:v:89:y:2005:i:11-12:p:1981-2003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(05)00025-3
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cremer, Helmuth & Pestieau, Pierre & Rochet, Jean-Charles, 2003. "Capital income taxation when inherited wealth is not observable," Journal of Public Economics, Elsevier, vol. 87(11), pages 2475-2490, October.
    2. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, vol. 5(1), pages 121-159, December.
    3. Diamond, Peter A. & Stiglitz, Joseph E., 1974. "Increases in risk and in risk aversion," Journal of Economic Theory, Elsevier, vol. 8(3), pages 337-360, July.
    4. Seade, J. K., 1977. "On the shape of optimal tax schedules," Journal of Public Economics, Elsevier, vol. 7(2), pages 203-235, April.
    5. Sören Blomquist & Vidar Christiansen, 2005. "The Role of Prices for Excludable Public Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 61-79, January.
    6. Schmitz, Patrick W, 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," Public Finance = Finances publiques, , vol. 52(1), pages 89-101.
    7. Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
    8. Deb, Rajat & Razzolini, Laura, 1999. "Auction-Like Mechanisms for Pricing Excludable Public Goods," Journal of Economic Theory, Elsevier, vol. 88(2), pages 340-368, October.
    9. Boadway, Robin & Keen, Michael, 1993. "Public Goods, Self-Selection and Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 463-478, August.
    10. Mikhail Golosov & Narayana Kocherlakota & Aleh Tsyvinski, 2003. "Optimal Indirect and Capital Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 569-587.
    11. Vidar Christiansen, 1981. "Evaluation of Public Projects under Optimal Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(3), pages 447-457.
    12. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1163-1188.
    13. Peter J. Hammond, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 263-282.
    14. John O. Ledyard & Thomas R. Palfrey, 1999. "A Characterization of Interim Efficiency with Public Goods," Econometrica, Econometric Society, vol. 67(2), pages 435-448, March.
    15. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    16. Hanming Fang & Peter Norman, 2003. "An Efficiency Rationale for Bundling of Public Goods," Cowles Foundation Discussion Papers 1441, Cowles Foundation for Research in Economics, Yale University.
    17. Martin Hellwig, 2004. "Optimal Income Taxation, Public-Goods Provision and Public-Sector Pricing: A Contribution to the Foundations of Public Economics," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2004_14, Max Planck Institute for Research on Collective Goods.
    18. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(2), pages 305-325.
    19. Cremer, Helmuth & Laffont, Jean-Jacques, 2003. "Public goods with costly access," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1985-2012, September.
    20. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    21. Cremer, Helmuth & Pestieau, Pierre & Rochet, Jean-Charles, 2001. "Direct versus Indirect Taxation: The Design of the Tax Structure Revisted," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 781-799, August.
    22. George J. Mailath & Andrew Postlewaite, 1990. "Asymmetric Information Bargaining Problems with Many Agents," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(3), pages 351-367.
    23. Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 589-614.
    24. Dreze, Jacques H., 1980. "Public goods with exclusion," Journal of Public Economics, Elsevier, vol. 13(1), pages 5-24, February.
    25. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    26. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    27. Deb, Rajat & Razzolini, Laura, 1999. "Voluntary cost sharing for an excludable public project," Mathematical Social Sciences, Elsevier, vol. 37(2), pages 123-138, March.
    28. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
    29. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Boyer, Pierre C., 2015. "Inequality-averse principal, exogenous budget, and second-best public-goods provision," Economics Letters, Elsevier, vol. 127(C), pages 61-63.
    2. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    3. Vincent Meisner & Pascal Pillath, 2024. "Monetizing digital content with network effects: A mechanism-design approach," Papers 2408.15196, arXiv.org, revised Oct 2024.
    4. Maniquet, François & Sprumont, Yves, 2010. "Sharing the cost of a public good: An incentive-constrained axiomatic approach," Games and Economic Behavior, Elsevier, vol. 68(1), pages 275-302, January.
    5. Hanming Fang & Peter Norman, 2003. "An Efficiency Rationale for Bundling of Public Goods," Cowles Foundation Discussion Papers 1441, Cowles Foundation for Research in Economics, Yale University.
    6. Martin F. Hellwig, 2010. "Utilitarian mechanism design for an excludable public good," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(3), pages 361-397, September.
    7. Meisner, Vincent & Pillath, Pascal, 2024. "Monetizing digital content with network effects: A mechanism-design approach," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302417, Verein für Socialpolitik / German Economic Association.
    8. Hellwig, Martin F., 2007. "The provision and pricing of excludable public goods: Ramsey-Boiteux pricing versus bundling," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 511-540, April.
    9. Vincent Meisner & Pascal Pillath, 2024. "Monetizing digital content with network effects: A mechanism-design approach," Berlin School of Economics Discussion Papers 0049, Berlin School of Economics.
    10. Han, Seungjin, 2015. "Robust competitive auctions," Economics Letters, Elsevier, vol. 136(C), pages 207-210.
    11. Hans Gersbach, 2010. "Democratic Provision of Divisible Public Goods," CESifo Working Paper Series 2939, CESifo.
    12. Yeti Nisha Madhoo & Shyam Nath, 2014. "Beneficiary charges: The Cinderella of subnational finance," Chapters, in: Richard M. Bird & Jorge Martinez-Vazquez (ed.), Taxation and Development: The Weakest Link?, chapter 11, pages 364-402, Edward Elgar Publishing.
    13. Hellwig, Martin, 2004. "Optimal income taxation, public-goods provision and public-sector pricing : a contribution to the foundations of public economics," Papers 04-42, Sonderforschungsbreich 504.
    14. Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
    15. Hanming Fang & Peter Norman, 2010. "Optimal Provision of Multiple Excludable Public Goods," American Economic Journal: Microeconomics, American Economic Association, vol. 2(4), pages 1-37, November.
    16. Grunewald, Andreas & Hansen, Emanuel & Pönitzsch, Gert, 2014. "Political Selection and the Concentration of Political Power," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100339, Verein für Socialpolitik / German Economic Association.
    17. Obara, Takuya & 小原, 拓也 & Tsugawa, Shuichi & Managi, Shunsuke, 2019. "Envy-free Pricing for Impure Public Good," CCES Discussion Paper Series 69, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    18. Takuya Obara & Shuichi Tsugawa & Shunsuke Managi, 2021. "$$\lambda $$ λ envy-free pricing for impure public good," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 11-25, April.
    19. Li, Yunan & Zhang, Xingtan, 2024. "Collective decision through an informed mediator," Journal of Economic Theory, Elsevier, vol. 218(C).
    20. OBARA, Takuya, 2016. "The optimal differentiated income taxation for groups categorized based on benefits from public goods," CCES Discussion Paper Series 64, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    21. Yeti Nisha Madhoo & Shyam Nath, 2010. "Beneficiary Charges: The Cinderella of Subnational Finance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1317, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    22. Gravel, Nicolas & Poitevin, Michel, 2019. "Optimal provision of a public good with costly exclusion," Games and Economic Behavior, Elsevier, vol. 117(C), pages 451-460.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Hellwig, 2004. "Optimal Income Taxation, Public-Goods Provision and Public-Sector Pricing: A Contribution to the Foundations of Public Economics," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2004_14, Max Planck Institute for Research on Collective Goods.
    2. Hellwig, Martin F., 2007. "The provision and pricing of excludable public goods: Ramsey-Boiteux pricing versus bundling," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 511-540, April.
    3. Felix Bierbrauer, 2009. "Optimal Income Taxation and Public Goods Provision in a Large Economy with Aggregate Uncertainty," CESifo Working Paper Series 2701, CESifo.
    4. Felix Bierbrauer, 2010. "An incomplete contracts perspective on the provision and pricing of excludable public goods," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_01, Max Planck Institute for Research on Collective Goods.
    5. Felix Bierbrauer, 2009. "On the Legitimacy of Coercion for the Financing of Public Goods," Working Papers 2009.98, Fondazione Eni Enrico Mattei.
    6. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    7. Bierbrauer Felix J., 2016. "Effizienz oder Gerechtigkeit?: Ungleiche Einkommen, ungleiche Vermögen und Optimale Steuern," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(1), pages 2-24, April.
    8. Vincent Meisner & Pascal Pillath, 2024. "Monetizing digital content with network effects: A mechanism-design approach," Berlin School of Economics Discussion Papers 0049, Berlin School of Economics.
    9. Felix Bierbrauer, 2016. "Effizienz oder Gerechtigkeit? Ungleiche Einkommen, ungleiche Vermögen und die Theorie der optimalen Besteuerung," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_03, Max Planck Institute for Research on Collective Goods.
    10. Ledyard, John O. & Palfrey, Thomas R., 2007. "A general characterization of interim efficient mechanisms for independent linear environments," Journal of Economic Theory, Elsevier, vol. 133(1), pages 441-466, March.
    11. Bierbrauer, Felix, 2009. "On the legitimacy of coercion for the nancing of public goods," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 265, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    12. Vincent Meisner & Pascal Pillath, 2024. "Monetizing digital content with network effects: A mechanism-design approach," Papers 2408.15196, arXiv.org, revised Oct 2024.
    13. Obara, Takuya & 小原, 拓也 & Tsugawa, Shuichi & Managi, Shunsuke, 2019. "Envy-free Pricing for Impure Public Good," CCES Discussion Paper Series 69, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    14. Felix Bierbrauer, 2009. "On the Legitimacy of Coercion for the Financing of Public Goods," CESifo Working Paper Series 2663, CESifo.
    15. Bierbrauer, Felix J., 2011. "Incomplete contracts and excludable public goods," Journal of Public Economics, Elsevier, vol. 95(7), pages 553-569.
    16. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    17. Takuya Obara & Shuichi Tsugawa & Shunsuke Managi, 2021. "$$\lambda $$ λ envy-free pricing for impure public good," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 11-25, April.
    18. Felix Bierbrauer, 2008. "Optimal Income Taxation, Public Goods Provision and Robust Mechanism Design," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_31, Max Planck Institute for Research on Collective Goods.
    19. Carlos E. da Costa, 2009. "Yet Another Reason to Tax Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 363-376, April.
    20. Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 589-614.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:89:y:2005:i:11-12:p:1981-2003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.