Tuesday 11
Public sector
Subhra Bhattacharya
› 11:00 - 11:30 (30min)
› 602
An Impure Theory of Public Expenditure
Nathan Chan  1@  , Mirco Dinelli  2@  
1 : Colby College  -  Website
4000 Mayflower Hill Waterville, Maine 04901 -  United States
2 : Colby College

Impure public goods, like environmentally-friendly and socially-responsible products, have garnered sustained interest. However, existing research on impure public goods focuses on individual consumer decision-making and Nash equilibrium outcomes; little has been done to analyze how policy can improve efficiency in such markets. We develop a cost sharing mechanism to implement a Pareto optimal allocation in impure public good markets. We prove the existence of the cost sharing solution and conditions for uniqueness. We also elucidate the efficiency and comparative static properties of the resulting equilibrium. Our analysis has many applications, ranging from renewable energy to international environmental protection.

 


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