Abstract
It is well known that private provision of a public good may lead to a higher supply than that in some Pareto optimal allocation. The traditional view attributes this “overprovision anomaly” to a specific kind of preferences. The present paper, however, shows that preferences do not play a decisive role. Assuming normality, overprovision will occur only if the distribution of income is extremely skewed and Pareto optimal allocations are not within the set of cost-share equilibria.
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Buchholz, W., Peters, W. The overprovision anomaly of private public good supply. Zeitschr. f. Nationalökonomie 74, 63–78 (2001). https://doi.org/10.1007/BF01231216
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DOI: https://doi.org/10.1007/BF01231216
Keywords
- overprovision of public goods
- subscription equilibria
- Warr neutrality
- cost-share equilibria
- Lindahl prices