Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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PRIVATE PROVISION OF A PUBLIC GOOD IN A GENERAL EQUILIBRIUM MODEL


Category: Economic Theory
Equilibrium Analysis
Wednesday 28th August 2002, 09:30 - 11:00, Room: 4.6
Session Chair(s): Hans Haller, Virginia Polytechnic Institute and State University, UNITED STATES

Presenter(s): Zenginobuz, Unal

Co-Author(s): Villanacci, Antonio

Keyword(s): general equilibrium, neutrality result, public goods

JEL(s): D51, H41

Abstract:

We analyze a general equilibrium model of a completely decentralized pure public good economy. Competitive firms use private goods as inputs to produce the public good, which is privately financed by households. Two distinguishing features of the model are the presence of several private goods and non-linear, in fact strictly concave, production technology for the public good. In this more general framework we revisit the question of ''neutrality'' of government interventions on private provision equilibrium outcomes. We show that relative price effects, which are absent with a single private good and under constant returns to scale technology for public good production, come to play an important role and generate non-neutrality results.


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Paper Reference Number: 1091

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57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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