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Comparing the first best and the second best provision of a club good; an example

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journal contribution
posted on 08.12.2009, 16:22 by Clive D. Fraser, Ali Al-Nowaihi
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.

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Citation

Economics Bulletin, 2006, 8 (6), pp.1-6

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VoR (Version of Record)

Published in

Economics Bulletin

Publisher

Economics Bulletin

issn

1545-2921

Copyright date

2006

Available date

08/12/2009

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http://www.economicsbulletin.com/

Language

en

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