Premium
Excludable and Non‐excludable Public Inputs: Consequences for Economic Growth
Author(s) -
OTT INGRID,
TURNOVSKY STEPHEN J.
Publication year - 2006
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2006.00506.x
Subject(s) - excludability , economics , endogenous growth theory , microeconomics , revenue , public finance , public good , government (linguistics) , monopoly , tax revenue , public economics , production (economics) , finance , market economy , macroeconomics , linguistics , philosophy , human capital
Non‐excludable and excludable public inputs are introduced into an endogenous growth model. We derive the equilibrium growth rate and design the optimal tax and user‐cost structure, emphasizing the role of congestion and its consequences for the government's budget. The latter comprises fee and tax revenues that are used to finance the public inputs, although they may generate insufficient revenue to do so entirely. We extend the model to allow for monopoly pricing of the user fee by the government. Most of the analysis is conducted for general production functions consistent with endogenous growth, but the CES technology is also considered.