Empirical Economics

, Volume 16, Issue 1, pp 25–33 | Cite as

Public good provision rules and income distribution: Some general equilibrium calculations

  • J. Piggott
  • J. Whalley
Article

Abstract

A central issue in the analysis of public goods is the relationship between the optimal provision level and the distribution of income. Theoretical research has stressed the conditions under which the optimum is independent of the distribution of income. Here we focus on numerical analysis of more policy-relevant concerns. Specifically, to what extent is a given redistribution of income likely to affect the optimal level of public good supply? And how significant are the welfare costs of not adjusting public good supply when income distribution changes? We use an applied general equilibrium (AGE) model of the Australian economy and public sector to generate numerical estimates of the impacts of redistributive policies on these variables. Results suggest that the traditional separation of allocation and distribution in determining the level of public good supply may be a justifiable empirical simplification, except where very dramatic redistributions are involved.

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Copyright information

© Physica-Verlag 1991

Authors and Affiliations

  • J. Piggott
    • 1
  • J. Whalley
    • 2
    • 3
  1. 1.School of Economics University of New South Wales Sydney Australia & Research School of Social SciencesAustralian National UniversityCanberraAustralia
  2. 2.Department of EconomicsUniversity of Western OntarioLondonCanada
  3. 3.National Bureau of Economic ResearchCambridgeUSA

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