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Forty years of public economics: a personal perspective

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  • DRÈZE, J. H.

Abstract

This paper presents a personal perspective on the field of public economics, as I have seen it evolve over the past forty years. Starting in the early fifties, microeconomic theory invaded the age-old field of public finance. A central core of this work consists in deriving general qualitative formulae, within the general equilibrium model extended to encompass a public sector, public goods and taxation. That central development is flanked on one side by implementable solutions to practical problems (I refer in particular to public utility pricing, road pricing and auction design) , on the other side by the development of a rich abstract framework (I refer to equilibrium with increasing returns, state-contingent contracts, priority service contracts, ... ). The two flanks should come together, as they did in the early fifties when the theoretical developments grew out of practical applications. Yet, few economists succeed in creatively linking theory to real problems, and our professional organisation fails to promote adequately such contributions and their authors. Next to this emphasis on the interplay of theory and applications, I discuss briefly the success of public economics, its fragmentation into subfields and its relation to macroeconomics. The writing of this paper was prompted by my participation in editing a volume of selected papers by William Vickrey, on his 80th birthday. Frequent references are made to his work, which is exemplary of the perspective presented here.
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Suggested Citation

  • Drèze, J. H., 1995. "Forty years of public economics: a personal perspective," LIDAM Reprints CORE 1154, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1154
    DOI: 10.1257/jep.9.2.111
    Note: In : Journal of Economic Perspectives, 9 (2), 111-130, 1995
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    Cited by:

    1. Williamson, Oliver E., 2010. "Transaction Cost Economics: The Natural Progression," Journal of Retailing, Elsevier, vol. 86(3), pages 215-226.
    2. Mongin, P., 1999. "Normes et jugements de valeur en economie normative," Papers 99-20, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
    3. Shoup, Donald C., 2004. "The ideal source of local public revenue," Regional Science and Urban Economics, Elsevier, vol. 34(6), pages 753-784, November.
    4. Richard Arnott, 1998. "William Vickrey: Contributions to Public Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 93-113, February.
    5. Williamson, Oliver E., 2010. "Transaction Cost Economics: The Origins," Journal of Retailing, Elsevier, vol. 86(3), pages 227-231.
    6. Oliver E. Williamson, 2014. "The Transaction Cost Economics Project," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 10(1), pages 7-12.
    7. Pierre Pestieau, 1994. "The current state and future directions of public finance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(2), pages 169-174, October.
    8. David, Laurent & Le Breton, Michel & Merillon, Olivier, 2007. "Kolm as a Contributor to Public Utility Pricing, Second Best Culture and the Theory of Regulation," IDEI Working Papers 490, Institut d'Économie Industrielle (IDEI), Toulouse.
    9. Agnar Sandmo, 1999. "Asymmetric Information and Public Economics: The Mirrlees-Vickrey Nobel Prize," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 165-180, Winter.
    10. Guillem López i Casasnovas & David Casado i Marín, "undated". "Análisis prospectivo de la oferta de servicios públicos en España," Studies on the Spanish Economy 28, FEDEA.
    11. David, Laurent & Le Breton, Michel & Merillon, Olivier, 2007. "Public Utility Pricing and Capacity Choice with Stochastic Demand," IDEI Working Papers 489, Institut d'Économie Industrielle (IDEI), Toulouse.
    12. Maria Elena Tudor, 2011. "Administrative Services Public Market," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(39), pages 100-109.
    13. World Bank, 2005. "Primer on Demand-Side Management : With an Emphasis on Price-Responsive Programs," World Bank Publications - Reports 8252, The World Bank Group.

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