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Title: Comparing the first best and the second best provision of a club good; an example
Authors: Fraser, Clive D.
Al-Nowaihi, Ali
First Published: 26-Mar-2006
Publisher: Economics Bulletin
Citation: Economics Bulletin, 2006, 8 (6), pp.1-6
Abstract: 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.
ISSN: 1545-2921
Version: Publisher Version
Status: Peer-reviewed
Type: Article
Rights: Copyright © 2006, The authors. Deposited with reference to the publisher’s archiving policy available on the SHERPA/RoMEO website.
Appears in Collections:Published Articles, Dept. of Economics

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