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Samuelson Machines and the Optimal Public-Private Mix

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  • Kanbur, Ravi
  • Clark, Simon

Abstract

Standard economic analysis assumes the sets of public and private goods to be exogenously given. Yet societies very often choose the public-private mix, using resources to convert seemingly private goods into ones with public goods characteristics and vice versa. And, in practice, we see a bewilderingly large variety of public-private mixes across societies. This papers advances an analysis of the choice of the public-private mix in the framework of voluntary contributions to public goods provision, by envisaging that, starting from a situation where all goods have private characteristics, some goods can be changed to have public goods characteristics at a cost (by purchasing a “Samuelson machine”). It characterizes the jointly optimal choice of the public-private mix and the efficient supply or not of the public goods in the mix. This characterization generates a number of testable predictions on the public-private mix, and on the prevalence of free riding.

Suggested Citation

  • Kanbur, Ravi & Clark, Simon, 2002. "Samuelson Machines and the Optimal Public-Private Mix," Working Papers 127321, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127321
    DOI: 10.22004/ag.econ.127321
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    References listed on IDEAS

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    1. Todd Sandler & John Tschirhart, 1997. "Club theory: Thirty years later," Public Choice, Springer, vol. 93(3), pages 335-355, December.
    2. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    3. Keith Hartley & Todd Sandler, 2001. "Economics of Alliances: The Lessons for Collective Action," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 869-896, September.
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    Cited by:

    1. Rob Moir, 2004. "Lotteries as a funding tool for financing public goods," CEEL Working Papers 0401, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.

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    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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