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Financing productive local public goods

Duranton, Gilles and Déo, Stéphane (1999) Financing productive local public goods. Journal of Urban Economics, 42 (2). pp. 264-286. ISSN 0094-1190

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Abstract

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.

Item Type: Article
Official URL: http://www.elsevier.com/locate/jue
Additional Information: © 1999 Academic Press
Library of Congress subject classification: G Geography. Anthropology. Recreation > G Geography (General)
Sets: Departments > Geography and Environment
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 17 Feb 2010 15:52
URL: http://eprints.lse.ac.uk/7266/

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