Notes for an Economic theory of socialism
KeywordsEconomic Theory Public Finance
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- 1.In a recent paper, J. G. Head and C. S. Shoup classify goods into three distinct categories depending on the relative efficiency of market and nonmarket modes of provision. Their analysis is primarily classificatory but they appear to compare the two organizational modes as mutually exclusive alternatives. They neglect the mixed alternatives treated in this paper. As I shall indicate, a broad three-part classification also emerges from my construction. The central difference between their approach and my own stems from their emphasis on the effects of inframarginal cost sharing schemes. If this is neglected, as I have done in this paper, the analysis of Head and Shoup suggests that the relative efficiency of the different organizational forms would depend only on cost differentials; that is, on the presence or absence of jointness efficiencies. This would, in turn, imply that all goods for which such gains from joint consumption arise can be more advantageously provided as collective-consumption goods, income effects apart. Head and Shoup seem to neglect the distributional inefficiencies arising from collectively-imposed uniformities in consumption. See, J. G. Head and C. S. Shoup, “Public Goods, Private Goods, and Ambiguous Goods,” ECONOMIC JOURNAL, LXXIX (September 1969), 567–572.Google Scholar
- 3.For an elaboration of this point, see my, DEMAND AND SUPPLY OF PUBLIC GOODS (Chicago: Rand McNally, 1968), Ch. 9.Google Scholar
- 5.A similar sort of dimensional shift was used previously in my paper, “A Public Choice Approach to Public Utility Pricing,” PUBLIC CHOICE, V. (Fall 1968), 1–18.Google Scholar
- 10.This position has properties that are analogous to those that characterize a solution in the core of an n-person game. For an effort to relate public-goods theory to the concept of the core, although in a setting different from that of this paper, see Mark Pauly, “Clubs, Commonality, and the Core,” ECONOMICA, XXXIV (August 1967), 314–324.Google Scholar
- 11.I am indebted to Yoram Barzel, University of Washington, for this point.Google Scholar
© Center for Study of Public Choice Virginia Polytechnic Institute 1970