Comparing the first best and the second best provision of a club good; an example
Clive D. Fraser
Ali Al-Nowaihi
2381/2910
https://figshare.le.ac.uk/articles/journal_contribution/Comparing_the_first_best_and_the_second_best_provision_of_a_club_good_an_example/10089995
Excludable and congestible shared goods − club goods (e.g., internet access facilities) − are
more prevalent than Samuelsonian public goods. Our example shows that, unlike the usual
presumption with pure public goods, the optimal second−best supply of a club good might
exceed its first−best level. We argue that this arises because user charges can be levied on
club goods; the government need not impose distortionary taxes to finance them. Thus, the
first and second best in a club economy differ mainly because informational constraints
prevent the government achieving the right income distribution in the latter.
2009-12-08 16:22:05
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