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Simon Clark and Ravi Kanbur
''Samuelson machines and the optimal public-private mix''
( 2006, Vol. 8 No.13 )
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. 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
D6 - Welfare Economics: General
Manuscript Received : Nov 30 2006 Manuscript Accepted : Dec 01 2006

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