Department of Economics
University of North Carolina at Chapel Hill
107 Gardner Hall
Chapel Hill, NC 27599-3305
Institutional Affiliation: University of North Carolina - Chapel Hill
Information about this author at RePEc
NBER Working Papers and Publications
|February 2008||Toward an Efficiency Rationale for the Public Provision of Private Goods|
with Hanming Fang: w13827
This paper shows that public provision of private goods may be justified on pure efficiency grounds in an environment where individuals consume both public and private goods. The government's involvement in the provision of private goods provides it with information about individuals' private good purchases that facilitates more efficient revenue extraction for the provision of public goods. We show that public provision of the private good improves economic efficiency under a condition that is always fulfilled under stochastic independence and satisfied for an open set of joint distributions. Our model is an example where there is efficiency loss from separating revenue and expenditure problems in public finance, and is therefore of more general interest for the study of optimal taxation.
Toward an Efficiency Rationale for the Public Provision of Private Goods (with Peter Norman), This Version, June 2012, forthcoming, Economic Theory. citation courtesy of
|Optimal Provision of Multiple Excludable Public Goods|
with Hanming Fang: w13797
This paper studies the optimal provision mechanism for multiple excludable public goods when agents' valuations are private information. For a parametric class of problems with binary valuations, we demonstrate that the optimal mechanism involves bundling if a regularity condition, akin to a hazard rate condition, on the distribution of valuations is satisfied. Bundling alleviates the free riding problem in large economies in two ways: first, it may increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions. If the regularity condition is violated, then the optimal solution replicates the separate provision outcome.
Published: Hanming Fang & Peter Norman, 2010. "Optimal Provision of Multiple Excludable Public Goods," American Economic Journal: Microeconomics, American Economic Association, vol. 2(4), pages 1-37, November. citation courtesy of