Title: Governmental Provision of Public Goods Need Not Crowd Out Private Provision
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.
Publication Year: 2016
Publication Date: 2016-04-01
Language: en
Type: preprint
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