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Title:Public providers, versus private providers, of public goods: A general equilibrium study of the role of the state PDF Logo
Authors:Economides, George
Philippopoulos, Apostolis
Vassilatos, Vanghelis
Issue Date:2011
Series/Report no.:CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3487
Abstract:This paper studies the difference between public production and public finance of public goods in a dynamic general equilibrium setup. By public finance, we mean that the public good is produced by private providers with the government financing their costs. When the model is calibrated to match fiscal data from the UK economy, the main result is that, ceteris paribus, a switch from public production to public finance can have substantial aggregate and distributional implications. Public providers cannot beat private providers in terms of aggregate efficiency. We finally design a transfer scheme that can make a switch to private provision welfare improving for all agents including public employees.
Subjects:public goods
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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