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