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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: environmental economics; willingness-to-pay; willingness-to-accept; valuation; public goods; public goods provision; benefit-cost analysis
• Subjects: D - Microeconomics > D0 - General; H - Public Economics > H4 - Publicly Provided Goods; D - Microeconomics > D7 - Analysis of Collective Decision-Making; A - General Economics and Teaching > A1 - General Economics; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General; D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis

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