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Samuelson machines and the optimal public-private mix

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    Rights statement: © Clark, S., & Kanbur, R. (2006). Samuelson machines and the optimal public-private mix. Economics Bulletin, 8(13), 1-11.

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http://www.accessecon.com/pubs/eb/default.aspx?topic=Abstract&PaperID=EB-06H00002
Original languageEnglish
Pages (from-to)1-11
Number of pages11
JournalEconomics Bulletin
Volume8
Issue number13
Publication statusPublished - Dec 2006

Abstract

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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