A Note on the Economics of Public Intermediate Inputs
Bibliographic Data
| ID | 9722630 |
|---|---|
| Authors | J Vernon Henderson (0000-0002-0985-9415, corresponding author) |
| Year | 1974 |
| Volume | 41 |
| Issue | 163 |
| Pages | 322 |
| Publication date | 1974-08-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2553046 |
| OpenAlex | W2107536696 |
| Language | EN |
| Citations received | 2 |
| References cited | 4 |
The theoretical literature on pure public goods is primarily devoted to an analysis of public goods entering consumption. However, many pure public goods such as basic research, pollution, non-congested roads, flood control and farm weather reports enter market production activity. The few theoretical papers written on public intermediate inputs have been concerned with developing what the authors call the Samuelson efficiency conditions, parallel to the consumption conditions (Sandmo, 1972; Kaizuka, 1965; Thompson, 1968). This paper examines conceptual problems that arise when one has to specify production functions having public goods as an input. First, of particular interest is under what specifications the Samuelson conditions are meaningful or even valid. Secondly, I examine problems that arise when pure public goods enter production functions as unpriced inputs. For example, when unpriced private goods enter production functions of certain specifications they earn a rent that accrues to entrepreneurs as profits. These profits may attract entrants into the industry to dissipate the rents. For private goods this dissipation causes factor usage distortions as analysed extensively in the literature (Worcester, 1969; Meade, 1955). The question is whether rent dissipation with unpriced pure public intermediate inputs causes factor usage distortions. Throughout this paper I assume that firms cannot be excluded from utilizing the public intermediate input. With non-exclusion government support in provision of the intermediate input is necessary due to the free rider problem. The government currently supports the production of the input; and we assume that at present it makes it available at zero cost to all firms who choose to use it
Consumption (sociology) · Economic rent · Economics · Factors of production · Government (linguistics) · Microeconomics · Private good · Production (economics) · Public economics · Public good · Economic theories and models · Economics of Agriculture and Food Markets · Fiscal Policy and Economic Growth
| Unique citing works | 2 |
|---|---|
| Citations per year | 0,06 |
| Citation span | 1992 - 2022 (31) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |