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Pareto-Improving Redistribution and Pure Public Goods

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  • Richard Cornes
  • Todd Sandler
Abstract
In the pure public good model, the Nash equilibrium associated with one initial income distribution may Pareto dominate the equilibrium associated with another distribution of the same aggregate income. We explore this possibility and examine its implications for Pareto‐improving policy intervention by undertaking a comparative static analysis of Pareto‐improving tax‐financed increases in pure public good provision. Under some circumstances, a government can engineer policies that raise public good provision while increasing the well‐being of contributors and non‐contributors. Crucial factors promoting this outcome involve a large number of non‐contributors, a high marginal valuation for the public good by non‐contributors and a large aggregate response of contributors to changes in their income.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Richard Cornes & Todd Sandler, 1998. "Pareto-Improving Redistribution and Pure Public Goods," Keele Department of Economics Discussion Papers (1995-2001) 98/04, Department of Economics, Keele University.
    • Handle: RePEc:kee:keeldp:98/04
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