Economics Dictionary of Arguments

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Economic Theories on Social Goods - Dictionary of Arguments

Mause I 275
Public goods/Economic theories: Problem: because of the free rider problem (the use of public goods by non-paying members) the value of public goods cannot be determined. (See Public Goods/Samuelson).
Solution: Suggestion: certain incentive mechanisms should encourage individuals to disclose their true willingness to pay. (Clarke 1971 (1), Groves & Loeb 1975 (2))
VsClarke/VsGrove/VsLoeb: Problem: 1. unwanted side effects due to the high complexity, 2. there are infinitely many Pareto optima, since the sum of the marginal willingness to pay depends on the distribution positions of the individuals in the society.
Mause I 276
Public Goods/Economic theories: in a world of distorting taxes, the expenditure side cannot be viewed without the revenue side. The optimal supply of public goods then depends on which taxes can be used and to what extent these taxes lead to welfare losses due to their incentive-distorting effect.
Solution/Browning/Dahlby: the marginal costs of public goods are multiplied by one that represents the marginal costs of public funds. (3) (4) (5)
Vs: See Public Goods/Kaplow.

1. Edward H. Clarke. 1971. Multipart pricing of public goods. Public Choice 11 (1): 17– 33.
2.Theodore Groves & Martin Loeb. 1975. Incentives and public inputs. Journal of Public Economics 4: 211– 226.
3. Edgar K. Browning, 1976. The marginal cost of public funds. Journal of Political Economy 84: 283– 298.
4. Bev Dahlby, 2008. The marginal cost of public funds: Theory and applications. Cambridge, MA
5. Charles L. Ballard & Don Fullerton. 1992. Distortionary taxes and the provision of public goods. Journal of Economic Perspectives 6( 3): 117– 131.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Economic Theories
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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