Resource title

Financing productive local public goods

Resource image

image for OpenScout resource :: Financing productive local public goods

Resource description

Public economics typically assumes that local public goods only affect the utility of consumers. We analyze the case of purely productive local public goods within standard growth models. Investment in the public good enhances productivity only in the jurisdiction where it takes place. Capital, as well as people, is perfectly mobile. After characterizing the first-best equilibrium, we show that its decentralization to fiscally independent jurisdictions is more demanding than with local public consumer goods. In particular, efficient decentralization cannot be obtained with competitive land developers providing the public good through a simple land capitalization scheme.

Resource author

Resource publisher

Resource publish date

Resource language


Resource content type

Resource resource URL

Resource license