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$$\lambda $$ λ envy-free pricing for impure public good

Author

Listed:
  • Takuya Obara

    (Tohoku Gakuin University)

  • Shuichi Tsugawa

    (Okinawa University)

  • Shunsuke Managi

    (Kyushu University)

Abstract

In this paper, we examine the provision and pricing of an excludable public good with congestion under lump-sum tax/transfer, constrained by the reduction of envy. We adopt the $$\lambda $$ λ envy-free constraint as a weaker equity concept of no-envy and characterize the optimal public sector pricing rule depending on envy reduction concerns, which is different from the pricing rule contingent on utilitarian distributive concerns. We find that the two fairness concerns are countervailing with regard to the surcharge fee.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:etbull:v:9:y:2021:i:1:d:10.1007_s40505-020-00191-8
    DOI: 10.1007/s40505-020-00191-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Public sector pricing; $$lambda $$ λ envy-free; Public good; Excludability; Congestion;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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