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Author: | Bierbrauer, F.J. |
Title: | Incomplete contracts and excludable public goods |
Journal: | Journal of Public Economics
2011 : AUG, VOL 95:7-8 p. 553-569 |
Index terms: | regulations public goods asymmetric information |
Language: | eng |
Abstract: | We study whether a firm producing and selling access to an excludable public good should face a self-financing requirement, or receive subsidies helping to cover the cost of public-goods provision. The essential result is that the desirability of a self-financing requirement is shaped by an equity-efficiency trade-off: while first-best efficiency can't be achieved with such a requirement, its imposition limits the rent extraction ability of the firm. Hence, consumer surplus may be higher if the firm doesn't have access to public funds. |
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