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


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.


Public Sector Income Distribution Numerical Estimate Central Issue Theoretical Research 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Atkinson A B, Stern N H (1974). “Pigou, Taxation and Public Goods”. Review of Economic Studies, 41, January: 119–128Google Scholar
  2. Bergstrom T C, Cornes R (1983). “Independence of Allocative Efficiency from Distribution in the Theory of Public Goods”. Econometrica, 51, 6: 1753–1766Google Scholar
  3. Bergstrom T C, Goodman R P (1973). “Private Demands for Public Goods”. American Economic Review, 63: 280–296Google Scholar
  4. Foley D (1970) “Lindahl's Solution and the Core of an Economy with Public Goods”. Econometrica, 38: 1, 66–72Google Scholar
  5. Gorman W M (1953). “Community Preference Fields”. Econometrica, 21: 63–80Google Scholar
  6. Mansur A, Whalley J (1984). “Numerical Specification of Applied General Equilibrium Models” in Scarf H E, Shoven J (eds) Applied General Equilibrium Analysis. Cambridge University Press, New YorkGoogle Scholar
  7. Piggott J (1983) “A Walrasian Model of the Australian Economy and Public Sector: Specification Procedures and Data Set Construction”. Working Papers in Economic and Econometrics, No. 86, Australian National UniversityGoogle Scholar
  8. Pommerehne W W, Schneider F S (1978) “Fiscal Illusion, Political Institutions, and Local Public Spending”., Kyklos, 31: 381–408Google Scholar
  9. Samuelson P A (1954) “The Pure Theory of Public Expenditure”. Review of Economics and Statistics, 36: 387–389Google Scholar
  10. Shoven J, Whalley J (1984) “Applied General Equilibrium Models of Taxation and International Trade”. Journal of Economic Literature, September: 1007–1051Google Scholar
  11. St Hilaire F, Whalley J (1982) “Recent studies of Efficiency and Distributional Impacts of Taxes”, in Thirsk W R, Whalley J (eds), Tax Policy Options in the 1980s, Canadian Tax FoundationGoogle Scholar
  12. Whalley J, (1988) “Lessons from General Equilibrium Models”, in Aaron H J, Galper H and Pechman J A (eds), Uneasy Compromise: Problems of a Hybrid Income-Consumption Tax, Brookings Institution, Washington D.C., 15–58Google Scholar

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

Personalised recommendations