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Governmental Provision of Public Goods Need Not Crowd Out Private Provision

Author

Listed:
  • Hiroki Kondo

    (Department of Economics, Sophia University)

  • Amihai Glazer

    (Department of Economics, University of California-Irvine)

Abstract

Consider the private provision of a public good, where consumption of the public good requires an individual to spend time. We show that gov- ernmental provision of the public good financed by a labor tax reduces the incentive to work, increases the time available to an individual to consume the public good, and so increases the marginal utility to the individual of the public good. That in turn means that, in contrast to standard mod- els, governmental provision need not fully crowd out private provision. Instead, increased governmental provision can lead to an increase in the sum of private and governmental provision.

Suggested Citation

  • Hiroki Kondo & Amihai Glazer, 2016. "Governmental Provision of Public Goods Need Not Crowd Out Private Provision," Working Papers 151607, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:151607
    as

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    File URL: https://www.economics.uci.edu/research/wp/1516/15-16-07.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Public goods; Crowding out;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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