Munich Personal RePEc Archive

Optimal public goods provision: implications of endogenizing the labor/leisure choice

Flores, Nicholas E. and Graves, Philip E. (2008): Optimal public goods provision: implications of endogenizing the labor/leisure choice. Published in: Land Economics , Vol. 84, No. 4 : pp. 701-707.

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Abstract

Conventional analysis of public goods provision aggregates individual willinness to pay while treating income as exogenous, ignoring the fact that we generate income to allow us to purchase utility-generating goods. We explore the implications of endogenizing the laborl/leisure decision by explicitly considering leisure demand in a model of public goods provision. We consider benefit analysis of public goods provision and find that increments of the public good will generally be under-valued using conventional analysis while decrements to the public good (rare in public good settings) will be overvalued.

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