CITB08H3 Chapter Week 6: TIEBOUT (w6) A PURE THEORY OF LOCAL EXPENDITURES
Document Summary
Musgra(cid:448)e a(cid:374)d sa(cid:373)uel"s (cid:449)ork in public finance theory no market type solution exists to determine the level of expenditures on public goods. Co(cid:374)su(cid:373)ptio(cid:374) (cid:894)of pu(cid:271)li(cid:272) goods(cid:895) i(cid:374) sa(cid:373)uelso(cid:374)"s defi(cid:374)itio(cid:374) (cid:894)(cid:272)olle(cid:272)ti(cid:448)e (cid:272)o(cid:374)su(cid:373)ptio(cid:374)(cid:895) = broader meaning implies that act of consumption by one person does not diminish opp. For consumption by another, but also allows consumption to be in another form. While residents of a new housing project are better off, benefits also accrue to other residents of the community b/c clearing of slums (economically) Thus: many goods that appear to lack attributes of public goods, may be properly defined as public, if consumption is defined to include these external economies. Alternative definition to samuelson: a public good is one which should be produced, but for which there is not feasible method of charging the consumers does not remove all the problems of musgrave/samuelso(cid:374)"s (cid:449)ork.
