Introduction to Public Goods Theory
Paul Samuelson, The Pure Theory of Public Expenditures, Review of Economics and Statistics, 36(4): 350-356, 1954
Paul Samuelson, Diagrammatic Exposition of a Theory of Public Expenditure, Review of Economics and Statistics, 37(4):350-356, 1955
Paul Samuelson, Aspects of Public Expenditure Theories, Review of Economics and Statistics, 40(4):332-338, 1958
Erik Lindahl, Just Taxation--A Positive Solution, in Classics in the Theory of Public Finance, edited by R. Musgrave and A. Peacock
Theodore Bergstrom and Richard Cornes, Independence of Allocative Efficiency from Distribution in the Theory of Public Goods, Econometrica, 51(6):1753-1765, 1983
Lectures 1, 2, 3, and 4 from Bergstrom's Lecture Notes on Public Economics
Remarks on Readings in this section
The Lindahl article is a classic, written as a chapter in a book (in German) by the Swedish economist, Lindahl in 1919. It is short, modern in spirit, and a good thing to read. If you want to read more old classic articles by European public finance economists of the early 20th century, you can find them in the book "Classics in the Theory of Public Finance" from which this article is taken. The Samuelson papers are modern classics and everybody who studies public finance should read them. The Bergstrom-Cornes paper is well-known to your instructor.
Externalities and the Coase Theorem
Ronald Coase The Problem of Social Cost Journal of Law and Economics 3: pages 1-44 1960
Urs Schweitzer, Externalities and the Coase Theorem: Hypothesis or Result? Journal of Institutional and Theoretical Economics, 144:245-266, 1988
Garrett Hardin, The tragedy of the Commons, Science, 144:245-266, 1968
Theodore Bergstrom, Regulation of Externalities Journal of Public Economics, 5:131-138, 1976
Richard Schmalensee, et. al., An Interim Evaluation of Sulphur Dioxide Emissions Trading, Journal of Economic Perspectives, 12(3):53-68, 1998
Lectures 5 and 6 from Bergstrom's Lectures on Public Economics
Remarks on Readings in this Section
The Coase article is another classic that every student of public finance should read. Schweitzer's article presents a fine modern interpretation of Coase's ideas. Schweizer's piece is also an excellent introduction to mechanism design theory.
Congestion Externalities
William Vickrey, Pricing in Urban and Suburban Transport, American Economic Review, 52(2):,1963
William Vickrey, Congestion Theory and Transport Investment, American Economic Review, 59:251-260, 1969
Richard Arnott, Andrew de Palma, and Robin Lindsey, A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand, American Economic Review 83: pages161-179 1993
Richard Arnott and Ken Small, The Economics of Traffic Congestion, American Scientist 82: pages 446-455, 1994.
Jam Today, Road Pricing Tomorrow The Economist, December 6, 1997
London's Congestion Pricing
More on London Traffic
Southern California congestion pricing
Hal Varian and Jeffrey Mackie-Mason Economics of the Internet, 1994
Public goods theory has a lot to say about new economic problems that have arisen in the "information age." Several related papers and links can be found on Hal Varian's web page.
Remarks on Readings in this Section
I believe that the economics of congestion is a very promising area for further research. Two areas in which there are very important practical applications are traffic congestion and congestion on computer networks. In my opinion neither of these areas has received the attention from economists that is merited by its importance and interest. Both seems to me areas in which economic theory and econometrics are likely to be powerful tools.
Vickrey's papers are full of clever insights. The papers by Arnott and his coauthors develop these ideas with skill and elegance.
Introduction to Public Choice Theory and Voting
H. Bowen, The Interpretation of Voting in the Allocation of Resources, Quarterly Journal of Economics, 58(1):27-48, 1943
Jonathan Levin and Barry Nalebuff, An Introduction to Vote-Counting Schemes, Journal of Economic Perspectives, 9(1): 3-26, 1995
Hugo Sonnenschein, The Economics of Incentives: An Introductory Account, Nancy Schwartz Memorial Lecture, J. L. Kellogg School of Management, Northwestern University, 1983
Theodore Bergstrom, When Does Majority Rule Supply Public Goods Efficiently? Scandinavian Journal of Economics, 216-226, 1979
Arthur Denzau and Robert MacKay, Benefit Shares and Majority Voting, American Economic Review, 66(1):69-76, 1976
John Ledyard, The Pure Theory of Large Two Candidate Elections, Public Choice Vol. 44, (1984) pp. 7-41.
Timothy Feddersen and Wolfgang Pesendorfer, The Swing Voter's Curse, American Economic Review, 1996, vol 86, pp408-426
Tom Palfrey and Richard McKelvey An Experimental Study of Jury Decision Rule, Cal Tech working paper, 1997
Andrew Caplin and Barry Nalebuff, On 64%-Majority Rule, Econometrica, Vol. 56, No. 4. (Jul., 1988), pp. 787-814.
Theodore Bergstrom and Robert Goodman, Private Demands for Public Goods,
American Economic Review, Vol. 63, No. 3. (Jun., 1973), pp. 280-296.
Arye L. Hillman and John Riley, Politically Contestable Rents and Transfers, UCLA working paper, September, 1987
Decisions and Elections, Donald G. Saari, Cambridge University Press, 2001
A good place to look for more discussion and references on voting theory (and tips on ice-fishing technique and sauna etiquette) is Don Saari's home page
Private Provision of Public Goods
Theodore Bergstrom, Laurence Blume, and Hal Varian, Private Provision of Public Goods, Journal of Public Economics, 29:25-49 1986
James Andreoni and Theodore Bergstrom, Do government subsidies increase the private supply of public goods? Public Choice, 1997 (pdf file) (postscript file)
Mark Bagnoli and Bart Lipman, Implementing the Core Through Private Contributions, Review of Economic Studies, October, 1989, pp 583-601
John Morgan Financing Public Goods by Means of Lotteries Review of Economic Studies, 2000
John Morgan Funding Public Goods with Lotteries: An Experiment Working Paper, 1998
Theodore Bergstrom, Puzzles: Love and Spaghetti, The Opportunity Cost of Virtue, The Journal of Economic Perspectives, Vol. 3, No. 2. (Spring, 1989), pp. 165-173.
Eduardo Ley, On the Private Provision of Public Goods, A Diagrammatic Approach, Investigaciones Economicas, 20(1): 691-704, 1996
Jim Andreoni's home page Jim Andreoni has written a whole slew of nice papers about charitable giving, theory, empirical work, and experimental work. This is the first place to look if you want to learn more about this subject.
Public Goods in the Experimental Laboratory
John Ledyard, Public Goods: A Survey of Experimental Research in Kagel and Roth ed.Handbook of Experimental Economics Princeton University Press. 1993
James Andreoni and John Miller, Analyzing Choice with Revealed Preference: Is Altruism Rational?, University of Wisconsin working paper, June 1998
James Andreoni and Rachel Croson Partners versus Strangers: The Effect of Random Rematching in Public Goods Experiment, University of Wisconsin working paper, June 1998
Tom Palfrey and Jeffrey Prisbey, Anomalous Behavior in Public Goods Experiments, How Much and Why?, to appear, American Economic Review
Public Goods with Distortionary Taxation
Anthony B. Atkinson and Nicholas Stern. Pigou, taxation, and public goods. Review of Economic Studies 41:119--128, 1974.
Edward Foster and Hugo Sonnenschein. Price Distortion and Economic Welfare Econometrica 38:281--297, 1970.
Trout Rader. The Welfare Loss from Price Distortions Econometrica 44:6 1253--1257, 1976.
Theodore Bergstrom. Commentary on Rader and Foster-Sonnenschein in Economics with No Special Technology by Trout Rader, Input-Output Publishing Company pp 179-182
Public Goods With Exclusion
Minasian J,Television pricing and the theory of public goods. Journal of Law and Economics 71:71-80,1964.
Paul Samuelson.Public goods and subscription tv: Correction of the record. Journal of Law and Economics 71:81--84, 1964
William Oakland, Public Goods, Perfect Competition, and Underproduction, Journal of Political Economy, 82(5), 927-939, 1974
Geoffrey Brennan and Cliff Walsh, A Monopoly Model of Public Goods Provision: The Uniform Pricing Case The American Economic Review, 71(1):196-206,1981
Dagobert L. Brito, William H. Oakland, On the Monopolistic Provision of Excludable Public Goods The American Economic Review, 70(4):691-704, 1980
Michael E. Burns and Cliff Walsh, Market Provision of Price-excludable Public Goods: A General Analysis The Journal of Political Economy, 89(1):166-191, 1981
Michael Spence, Monopoly, Quality and Regulation, The Bell Journal of Economics, 6(1) 417-429, 1975
Michele Boldrin and David Levine, Why Napster is right, web publication
Ted Bergstrom and Carl Bergstrom The costs and benefits of library site licenses to academic journals Proceedings of the National Academy of Sciences, Jan 20,
2004, pp 897-904
Ted Bergstrom Free Labor for Costly Journals? , Journal of Economic Perspectives ,
Fall 2001
Benefit-Cost Analysis
Theodore Bergstrom , Benefit-Cost in a Benevolent Society,
UCSB working paper, January, 2005.
Preference Revelation Mechanisms
Theodore Groves and John Ledyard , Optimal Allocation of Public Goods: A Solution to the Free Rider Problem, Econometrica 45(4):783-809, May, 1977
Yan Chen and Charles Plott, The Groves-Ledyard Mechanism: An Experimental Study of Institutional Design",Journal of Public Economics 59:335-364, 1996
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