Foundations in Public Economics

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Cambridge University Press, Jun 24, 1988 - Business & Economics - 315 pages
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In this book, Professor David Starrett organizes within a single framework the major theoretical foundations of modern public sector economics. He presents a unified treatment of market failure that encompasses externalities, pure public goods, local public goods and natural monopolies. Professor Starrett then develops and assesses the efficacy of the various planning procedures - including representative voting, benefit cost analysis, incentive compatible design mechanisms and the free market. He devotes attention to both national and local issues, with the aim of identifying those methods that are best suited to each arena separately. Special attention is paid to financial arrangements, techniques for eliciting necessary information that is not readily available, and identification of biases that will result from incorrect procedures. This study will be useful to graduate students and economists who are interested in public finance or welfare economics.
  

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Contents

Introduction
3
Social objectives and direct decision making
8
21 Interpersonal comparisons
11
22 Majority voting
15
23 Bowen model
18
24 Political decentralization
20
Market decentralization
25
31 Command economy
26
102 Formulas based on secondbest decomposition
164
103 Case of tradeable goods
167
104 Formulas based on optimal taxation
168
105 General expressions for marginal cost of government spending
172
Local public goods
175
111 Direct taxation
176
112 Local commodity taxes
184
113 Biases in club choice
186

32 General Lagrangian procedure and the envelope theorem
31
33 Market decentralization
33
34 Extensions to an intertemporal context with uncertainty
36
Theory of collective goods
40
41 Typology of collective goods
42
42 Efficient allocation of a collective consumption good
44
43 Classical theory of clubs6
47
44 Heterogeneous clubs
52
45 Persistent scale economies in club size
55
46 Spatial clubs
58
Decision making in a mixed economy
63
Planning mechanisms
65
52 Problem of the common
73
53 Tiebouttype models of club decentralization
77
Henry George theorem
83
55 General mechanism design
85
Models of a mixed economy
90
61 Static model
91
62 Intertemporal considerations
95
63 Uncertainty and missing markets
100
Government budgeting and fiscal decentralization
104
71 Unified government budget
105
72 Impact of intergenerational and other governmental transfers
109
73 Capital account for government
112
74 Problems in budget coordination
113
75 Fiscal federalism
115
Public pricing and optimalcommodity taxation
120
82 DiamondMirrlees optimalcommoditytax framework
124
83 Fullcommoditytax discretion
128
84 Limitations on tax discretion
133
85 Broadly based taxes
135
86 Practical problems with uniform tax systems
140
87 Distributional concerns
141
Firstorder project analysis
143
Decompositions and general theory of second best
145
91 DiamondMirrlees framework
146
92 Intermediategoods taxation and quantity constraints
151
93 Nonlinear taxes
156
94 Practical rules and pitfalls of benefitcost analysis
158
Principles of shadow pricing
161
101 Categories of shadow prices
162
Intertemporal contexts with uncertainty
191
barebones model
195
123 Risk premiums in the DiamondDreze model
198
124 Model with full sequential structure
203
125 Project analysis with uncertainty and incomplete markets
210
Identifying shadow values hedonic methods and capitalization
212
131 Identification based on spanning
213
132 Identification with similar agents
216
133 Relationships between hedonic methods and capitalization
218
134 Internal capitalization
219
135 External capitalization
225
136 Comparison and perspective on capitalization measures
227
Evaluating large projects
231
Search for exact measures
233
141 Marginal analysis in presence of nonconvexity
234
142 Compensating variation in a market context
236
143 Measures for a mixed economy
243
144 Uncertainty and expected surplus
244
Surplus approximations
246
151 Secondorder approximations of individual utility
247
152 Aggregation of secondorder measures
249
153 Secondorder measures for a mixed economy
253
154 Upper and lower bounds
254
155 Direct use of naive surplus
258
Practical methods for largeproject evaluation
260
161 Recovering willingness to pay for collective goods
261
162 Parametric econometric identification
264
163 GrovesClarke mechanism
268
164 Commonly used framework
272
165 Project interactions and concept of alternative cost
273
Peakload problem
277
171 General welfare problem
278
172 Peakload phase
280
173 Optimal capacity for single project
283
174 Optimal timing of recursive investments
285
Epilog
293
References
294
Author index
307
Subject index
310
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