Private provision of public goods : neutrality and wealth-dependent preferences

Several authors have investigated the bounds of the so-called neutrality theorem where public goods are privately provided. Following this line of analysis, I investigate further in this paper the bounds of this result. I concentrate on an unexplored case in the existing literature- namely that where individual preferences for a public good are affected by respective levels of individual wealth. I prove that under such circumstances, the neutrality theorem no longer holds. More appealing, I discuss the conditions under which a redistribution of wealth might improve efficiency in the aggregate provision of public goods. Interestingly, we find that a redistribution of wealth from individuals who have a low valuation for public goods to those who have a high valuation for public goods does not necessarily increase its aggregate provision.

• Autores: Nupia Martínez, Oskar Andrés
• Tipo de recurso: Work document
• Fecha de publicación: 2012
• Institución: Universidad de los Andes
• Repositorio: Séneca: repositorio Uniandes
• Idioma: eng
• OAI Identifier: oai:repositorio.uniandes.edu.co:1992/8310
• Acceso en línea: http://hdl.handle.net/1992/8310
• Palabra clave: Income distribution; Neutrality theorem; Private provision; Public goods; Bienes públicos; Distribución del ingreso; D31
• Rights: openAccess
• License: http://creativecommons.org/licenses/by-nc-nd/4.0/