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A Note on the Efficient Pricing of Public Goods

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  • Dwight R. Lee

    (University of Colorado)

Abstract

It has been concluded by some that no positive price for a public good is con-sistent with consumption efficiency as it will discourage consumption that could be provided at zero cost. It is argued here that this conclusion is m error because it fails to distinguish between two distinct components ofpublic good consumption: (1) the quantity of the good made available, and (2) the duration of the use of what is available. By developing a model which explicitly considers these two components of consumption it is shown that a pattern of positive "entry" prices exists which will motivate efficiency in both the consumption and provision of a public good.

Suggested Citation

  • Dwight R. Lee, 1978. "A Note on the Efficient Pricing of Public Goods," Public Finance Review, , vol. 6(4), pages 503-511, October.
    • Handle: RePEc:sae:pubfin:v:6:y:1978:i:4:p:503-511
    DOI: 10.1177/109114217800600408
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    References listed on IDEAS

    as
    1. Demsetz, Harold, 1970. "The Private Production of Public Goods," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 293-306, October.
    2. Peter O. Steiner, 1957. "Peak Loads and Efficient Pricing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 71(4), pages 585-610.
    3. Burton A. Weisbrod, 1964. "Collective-Consumption Services of Individual-Consumption Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 78(3), pages 471-477.
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