Private provision of public goods can be efficient

Economists have long believed that private provision of public goods will be inefficient, though recently some have argued that altruism may mitigate the inefficiencies. Without altruism, agents contribute to the point where marginal cost equals their private marginal benefits. With altruism, they contribute more and hence are closer to the point where marginal cost and total marginal benefits are equated. In an earlier paper (Bagnoli and Lipman, 1989), we showed that private provision need not be inefficient. In a very natural model of private provision without altruism, we showed that the set of (undominated perfect) equilibrium outcomes is identical to the core. Here we consider the effect of altruism on private provision. Altruism essentially creates more public goods because the well-being of others becomes a public good. We show that our model of private provision still has efficient equilibria under a wide variety of circumstances. Interestingly, the equilibria may be inefficient when agents are concerned about the effect of private provision on the distribution of wealth. Intuitively, the game we consider is a very powerful instrument for efficient private provision, but must be supported by other instruments if the set of public goods is expanded too far.We wish to thank Jim Andreoni, Ted Bergstrom, and an anonymous referee for helpful comments and to acknowledge financial support from the National Science Foundation through NSF Grant SES-8520296. Of course, any remaining errors are our responsibility.     

Public–Private Partnerships and the Public Accountability Question

Public–private partnerships (PPPs) are growing in popularity as a governing model for delivery of public goods and services. PPPs have existed since the Roman Empire, but their expansion into traditional public projects today raises serious questions about public accountability. This article examines public accountability and its application to government and private firms involved in PPPs. An analytical framework is proposed for assessing the extent to which PPPs provide (or will provide) goods and services consistent with public sector goals of effectiveness, efficiency, and equity. Six dimensions—risk, costs and benefits, political and social impacts, expertise, collaboration, and performance measurement—are incorporated into a model that assists public managers in improving partnerships’ public accountability.     

Why the intrinsic value of public goods matters

Abstract

Existing accounts of public-goods distribution rely on the existence of solidarity for providing non-universal public goods, such as the humanities or national parks. There are three fundamental problems with these accounts: they ignore instances of social fragmentation; they treat preferences for public goods as morally benign, and they assume that these preferences are the only relevant moral consideration. However, not all citizens unanimously require public goods such as the humanities or national parks. Public-goods distribution that is based only on citizens’ preferences, therefore, means that non-universal public good are at a constant risk of under-provision, and has negative implications for human flourishing. The paper, therefore, develops a complementary justification for the distribution of public goods, that decouples the distribution of public goods from ad hoc preferences, and grounds the distributive justification in the intrinsic value of these goods. There are three reasons to include intrinsic-value considerations in public-goods distribution: responding to crowding-out effects; promoting shared heritage and cross-fertilization. Finally, the intrinsic-value justification may indirectly promote solidarity. Thus, the intrinsic-value and the solidarity justifications need not be mutually exclusive, rather they can be mutually reinforcing.     

Are minorities free riders? Applying the social resistance framework to public goods production in Central-Eastern Europe

One of the key reasons for the scholarly and policy concern about the rising levels of ethnic diversity is its apparently detrimental effect on the production of public goods. Although numerous studies have tackled that issue, there is still much ambiguity as to the precise micro-level mechanisms underpinning this relationship. In this article, a novel theoretical explanation for this relationship is proposed, building on the social resistance framework. This proposition is tested using a new cross-sectional public opinion survey covering 14,536 respondents in 817 neighbourhoods across 11 Central Eastern European countries. Analysing national minorities defined by postwar border changes means one can overcome the endogeneity problem faced by research based on immigrant groups. The findings show that it is the combination of a minority group's discrimination and its spatial clustering that makes minorities reluctant to contribute to public goods. The article constitutes a novel theoretical and methodological contribution to the research on the effects of diversity on public goods provision.     

Globalization and the Retreat of Citizen Participation in Collective Action: A Challenge for Public Administration

Globalization challenges the ability of contemporary public administration to encourage citizen participation in collective action through behaviors such as tax compliance and contributions to public goods. The authors introduce a new individual‐level approach to globalization, arguing that people vary in the extent to which they are globalized and that an individual's level of globalism (ILG) reflects attitudes and dispositions that influence the way he or she resolves the social dilemma of participation in collective action (i.e., the decision to contribute versus follow a “free‐ride” strategy). Using a four‐country sample, the article examines the relationship between ILG and collective action participation decisions in three behavioral experiments. Findings support the hypothesis that regardless of country‐level globalization, a more globalized individual complies less willingly with tax codes, donates less to local nongovernmental organizations, and prefers to adopt a free‐ride strategy in a public goods game. The consequences for public administration are discussed.     

Efficiency in the provision of pure public goods by private citizens

This paper raises an old question and proposes a new answer. The question is, “Must public goods be produced by governments?” The consensus answer is “Yes,” on the grounds that transaction costs related to group size prevent all potential consumers of a public good from entering into voluntary arrangements to produce efficient levels of that good. Government intervention thus is required to achieve efficiency. Yet many obvious examples of public goods are not financed or even subsidized by government. Conspicuous examples of this phenomenon include the development of important innovations in technique in fields such as music (Bach and Beethoven), literature (Defoe, Dickens and Shakespeare, not excepting Homer or Adam Smith), and the visual arts (Cezanne), not to mention many crucial scientific discoveries. Indeed, the obvious public-good aspects of scientific knowledge induced many private societies to offer prizes for particular innovations. Two questions are raised by the private, voluntary provision of nonrival outputs or inputs: (1) what conditions contribute to this phenomenon, and (2) can voluntary provision come “close” to efficient provision? We suggest in this paper that, under certain conditions, the gains from many public goods whose benefits reach nationwide populations are largely realized at group sizes far smaller than even county or municipal jurisdictions.     

Fair-Play Obligations: A Critical Note on Free Riding

McDermott rejects the argument that an individual, in receiving benefits from a political community, thus incurs a 'fair-play obligation' to contribute to the provision of these benefits. While acknowledging that an individual receiving benefits without contributing is 'free riding' and that free riding may be morally wrong, McDermott denies that such moral lapses entail communities having any right to demand support. Not contributing may be morally objectionable, but individuals may still have a right not to contribute. However, both proponents and opponents of the fair-play obligation claim do not sufficiently differentiate between different forms of free riding. Arguments tend to be based on rights that may or may not be invoked when individuals free ride through consuming externalities. However, this form of free riding does not entail any reciprocal obligations. Yet it can plausibly be argued that when free riding occurs in the case of the production of public goods, then communities can demand support from individuals, and can have a right to do so.     

Who are the volunteers in the battle against budget deficits?

Individuals differ in the net benefits that they receive from government activity depending on their taste for public goods, on the taxes that they pay, and on government demand for goods produced by specific factors that they own. Concentrating on ownership of specific factors as the major source of heterogeneity of the population, it is argued that deficit reduction will be decided on the basis of special economic interests rather than on wider macroeconomic issues. This study attempts to quantify the public-choice decision concerning a reduction in government expenditures which, in full equilibrium, would ‘crowd in’ an equal amount of investment expenditures. Using the 1977 U.S. input-output tables, each of the 85 industries is identified as a potential net gainer or loser of output as variable factors are reallocated in the wake of an assumed 10% reduction in federal government expenditures on goods and services (i.e., $14.3 billion). At one extreme is the military hardware industry as the largest loser and at the other extreme is the new construction industry as the largest gainer. The 90.5 million workers in these 85 industries are assumed to have some ‘attachment’ to their current industry and therefore vote for or against deficit reduction on the basis of their self-interest. It is found that the median voter experiences a net loss. Introducing voting costs reinforces this result because losses are more concentrated than gains. The paper ends with an attempt to identify characteristics that lead to high dependence on government contracts: they are labor-intensiveness and the wage rate.     

Quadratic voting as an input to cost-benefit analysis

When agencies regulate, they must calculate the costs and benefits of their regulations. To do this, they must often price non-market goods—for instance, the value of protecting wildlife or the environment. Regulators have typically relied upon contingent valuation surveys to put prices on these types of goods. But contingent valuation surveys are fraught with error and often give rise to implausible valuations that cannot be trusted. Quadratic voting offers a better solution. Agencies should hold quadratic votes over nonmarket goods and use those votes to price the goods at issue.     

Trajectories of Arts and Culture Policy in New Zealand

This article examines how arts and culture policy has been discussed since the 1960s in New Zealand, showing how it has increasingly been coupled with the construction of national identity. It also suggests that the rhetoric of the current Labour government marks a significant change. Against the traditional understanding of arts and culture as public and cultural goods, whose vital ‐ if intangible ‐ benefits justify the inevitable economic cost, since 1999 they have been fundamentally re‐imagined as contributing to a cohesive society ‐ through the fostering of “national identity” ‐ and also to a dynamic economy ‐ through the creation of jobs. This change is seen as an element of “third‐way” politics, and is argued to limit dangerously the sort of art that can be funded and valued.     

Policy Attitudes in Institutional Context: Rules,Uncertainty, and the Mass Politics of Public Investment

This article examines the link between citizens’ policy attitudes and the institutional context in which policies are carried out. The article develops a theory of opinion formation toward policies that impose costs on citizens in order to invest in broadly valued social goods. In this framework, problems of agency loss and time inconsistency leave citizens uncertain about whether promised policy benefits will be delivered. Citizen support for public investments thus depends on whether the institutional context makes elites’ policy promises credible. We consider hypotheses about how the institutional allocation of authority and the institutional rules governing implementation affect citizen support for public investment, and we find broad support for the framework in three survey experiments administered to representative samples of U.S. citizens. The results shed light on the link between political institutions and citizens’ attitudes, the capacities of voters for substantive political reasoning, and the political prospects for public investment.     

Collective Leadership and Context in Public Administration: Bridging Public Leadership Research and Leadership Studies

This article challenges the view that public leadership research should maintain a separate perspective in the study of public leadership. It discusses the benefits of further embedding the public leadership research domain within leadership studies, constructing a cross‐fertilization that contributes to advance both. The article maps key concerns in relational leadership theories, contrasting them with current work in the public leadership research domain and offering suggestions to close the gap. It highlights public leadership scholarship's competitive advantage to contribute to theorizing about leadership, given the importance of context for building contemporary theories of relational leadership.     

Public Service Motivation,Organizational Social Capital,and Knowledge Sharing in the Korean Public Sector

This article investigates whether public service motivation (PSM) and organizational social capital predict knowledge sharing in the public sector. The hypothesized relationships in the proposed model are verified with the online survey data of 506 public employees in Korea. The test results show that the two dimensions of PSM (attraction to public service and commitment to public values) and the trust component of organizational social capital are both positively related to knowledge sharing in the Korean public sector, and that the associability component of organizational social capital is indirectly associated with knowledge sharing through its influence on PSM. The article discusses the ways that PSM and organizational social capital may contribute to overcome the social dilemma of knowledge sharing in public organizations. It also suggests that there is need for further research on the individual dimensions of the PSM construct.     

Innovations in the provision of public goods and services

Current efforts at administrative reform in both developed and developing countries have invariably focused on the critical issue of provision of public goods and services. The accumulated experience and attendant innovations are therefore vast. Few attempts have been made to pull this experience together and draw salient features which might be of use to newcomers to the task of improving provision of public goods and services. This article draws on a panel of experts and government officials convened by the author who have reflected and/or experimented with innovative approaches to public good and service provision. After discussing the role of the state, market and civil society relative to public goods and services, the article lays out a set of basic institutional options for innovations in provision. The article concludes with some strategic considerations on the sequencing of steps to achieve successful market-based innovations in the provision of public goods and services in the context of the minimalist and the strong but restrained state. © 1998 John Wiley & Sons, Ltd.     

税收负担、公共品层次与私人公共品需求——以山东省面板数据为例

个人税收负担的增长会对公共品需求产生负向影响,这一结论在西方的研究中被普遍证明。本文从中国实际出发,借助经典的中位选民模型,考察了个人税收负担对公共品需求的影响。通过对山东省17市1997～2007年的面板数据进行实证分析,发现个人税收负担对公共品需求的负向影响在中国并不普遍存在。就影响公共品需求的各因素来看,公共品需求的收入弹性以及人口拥挤效应普遍存在;个人税收负担对济南、烟台两市一般公共品需求产生负向影响,对其余15个市产生正向效应。为进一步揭示税收负担对不同层次公共品需求的影响差异,选取了教育和公共安全这两类特殊公共品进行研究。山东省17地市的个人税收负担对教育这类公共品普遍产生负向影响;对公共安全类公共品产生完全正向效应。因此,本文认为山东省一般公共品市场是供给导向的市场,税收弹性与公共品需求层次相关,建议建立引导公民合理表达公共品需求意向机制。     

Securing Quality Through Contracts? The Development of Quasi-markets for Social Care in Britain

This article examines the early development in Britain of quasi-markets for domiciliary care. Initially there were widespread doubts about the appropriateness of market mechanisms for social care because it was regarded as inherently different from other goods and services. We examine these differences and how they are most apparent in domiciliary care — which is provided to the most vulnerable people in the most vulnerable of settings. The study provides a demanding test and illuminating case study of the introduction of competition through quasi-markets. It highlights some potential threats to service quality and demonstrates that to secure such quality for vulnerable users, public sector purchasers need to develop long-term, high-trust relationships with a range of high quality care providers.     

Is ‘good enough’ peacebuilding good enough? The potential and pitfalls of the local turn in peacebuilding in Timor-Leste

There is a palpable sense of humility within the United Nations and other international institutions regarding peacebuilding. Rather than seeking to implement the liberal peace, they now pursue the more modest goal of ‘good enough’ outcomes. This shift reflects a growing consensus in the critical literature that space needs to be provided for the local agency that will ultimately determine the outcomes of peacebuilding. At first blush this emphasis on local agency is positive; it offers an important correction to the technocratic and generally top-down nature of liberal peacebuilding. But, is the ‘good enough’ approach to peacebuilding good enough? What are the pitfalls and potential of the local turn? This article uses a case study of Timor-Leste to answer these questions. It finds that the local turn can help lend legitimacy to the state and increase opportunities for political participation and the delivery of public goods at the local level. However, the emerging evidence from Timor-Leste also highlights the pitfalls of the local turn. Most significantly, the state can transfer responsibility for public goods provision to the local level in order to lessen the burden on the state and to divert attention from ineffective or illegitimate central institutions.     

Beliefs and errors in voting choices: A restatement of the theory of fiscal illusion

This paper reformulates the theory of fiscal illusion to make it more compatible with the median-voter model of collective choice. It emphasizes the requirement that misperceptions about marginal tax-costs and benefits must be permanent to have any significant effect on the level of public expenditures. The Lancaster-Becker model of consumer demand is then used to demonstrate the peculiar effects of permanent misperceptions on consumer demand. It can be shown, for example, that other things being the same, a Republican who underestimates continuously the marginal benefits of public activities may demand more public goods than a Democrat who overestimates those same benefits in a permanent fashion.     

Looking a Gift Horse in the Mouth: Challenges in Managing Philanthropic Support for Public Services

Collaborations between nonprofit and public sector organizations have become an increasingly important phenomenon in state and local public service delivery since the publication of the Winter Commission report in 1993 . This article focuses on one of the less studied types of public–nonprofit collaborations, those in which philanthropic support from nonprofit organizations supplements the resources and activities of public agencies. Drawing on the case of “nonprofit‐as‐supplement collaborations” that support park services in New York City, this article documents the benefits and drawbacks associated with such collaborations. While they can provide increased resources and encourage management innovations, they also can lead to inequities in the availability and quality of services, the preponderance of particularistic goals over the broader public interest, and the politicization of previously bureaucratic decision making. The authors offer two strategies for public managers to realize more effectively the benefits yet mitigate the shortcomings of these collaborations.     

The Impact of Elections on Cooperation: Evidence from a Lab‐in‐the‐Field Experiment in Uganda

Communities often rely on sanctioning to induce public goods contributions. Past studies focus on how external agencies or peer sanctioning induce cooperation. In this article, we focus instead on the role played by centralized authorities, internal to the community. Combining “lab‐in‐the‐field” experiments with observational data on 1,541 Ugandan farmers from 50 communities, we demonstrate the positive effect of internal centralized sanctioning authorities on cooperative behavior. We also show that the size of this effect depends on the political process by which authority is granted: subjects electing leaders contribute more to public goods than subjects who were assigned leaders through a lottery. To test the ecological validity of our findings, we relate farmers’ behavior in the experiment to their level of cooperation in their community organization. We show that deference to authority in the controlled setting predicts cooperative behavior in the farmers’ natural environment, in which they face a similar social dilemma.