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Article
Do Government Subsidies Increase the Private Supply of Public Goods?
Public Choice (1996)
  • Ted Bergstrom, University of California, Santa Barbara
  • Jim Andreoni
Abstract

Can the government get people to contribute more to public goods by subsidizing voluntary contributions. In a general equilibrium model, answering this question is not a slam dunk, especially given the remarkable "neutrality theorems" in the theory of voluntary contributions. But our model yields a surprisingly decisive comparative statics result. If public goods and private goods are both normal goods, then increases in the subsidy rate necessarily increase the equilibrium supply of public goods.

Keywords
  • public goods,
  • voluntary contributions,
  • subsidies,
  • neutrality
Publication Date
1996
Citation Information
Ted Bergstrom and Jim Andreoni. "Do Government Subsidies Increase the Private Supply of Public Goods?" Public Choice Vol. 88 (1996)
Available at: http://works.bepress.com/ted_bergstrom/2/