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• Foreword
• Preface
• The Demand and Supply of Public Goods
• 1.: A Methodological Introduction
• 2.: Simple Exchange In a World of Equals
• 3.: Simple Exchange In a World of Unequals
• 4.: Pure and Impure Public Goods
• 5.: Many Private Goods, Many Persons: the “free-rider” Problem
• 6.: Many Public Goods, Many Persons: the World Without a Numeraire
• 7.: The Publicness of Political Decisions
• 8.: The Institutions of Fiscal Choice
• 9.: Which Goods Should Be Public? 5
• 10.: Toward a Positive Theory of Public Finance
• Supplementary Reading Materials

Preface

The title, “The Demand and Supply of Public Goods,” has been selected to emphasize those features that set the book apart from orthodox public finance and at the same time tie it to neoclassical economics. Public finance, traditionally, has neither contained a theory of demand nor one of supply. Public goods and services have not been central to this subdiscipline. Public finance has been rather straightforward applied price theory, and its scientific content has been limited to predictions about the reactions of individuals and firms to fiscal institutions. The scholar from outer space, coming to earth in the post-Marshallian era, might have concluded on perusing the English-language literature that governments exist wholly apart from their citizens, that these units impose taxes on individuals and firms primarily to nourish the state; and he might have thought that positive public finance consists in predicting the effects of these taxes. Normative public finance, observed alongside the positive elements, consists in pronouncements about how taxes should be imposed.

Marshallian economics is essentially a theory of the demand for and the supply of private goods, and of the institutions (markets) through which exchange takes place. Traditional public finance has been applied Marshallian economics with a liberal side dosage of utilitarian nonsense. The linguistic provincialism of English-language scholars precluded familiarity with early continental attempts to extend economic theory to public as well as to private goods. The words of Sax, Pantaleoni, de Viti de Marco, Mazzola, Erik Lindahl, and, most importantly, Knut Wicksell remained almost wholly ignored in English and American writings before World War II.

Through the work of R. A. Musgrave, Howard Bowen, Paul Samuelson, J. G. Head and others, this deficiency has been overcome to an extent during the last quarter-century. A theory of the demand for and the supply of public goods and services has emerged, built on the foundations of the late-nineteenth-century continental efforts, and this theory is now beginning to find its place in the elementary public-finance textbooks, especially those that have been written since the mid-1950s. No independent and systematic exposition of the theory has appeared; this provides the motivation for the present book.

The analysis is necessarily different even if not difficult, and there need be no pretense that this is an elementary textbook of the standard sort. A degree of sophistication in economic analysis is required and some familiarity with the content of theoretical welfare economics should prove helpful. I have tried, where possible, to present the analysis carefully. Although no claims are made concerning new theory here, my own insight and arrangement of the theoretical structure differ from those of some other scholars in the field. To this extent, the treatment is uniquely mine, and no attempt is made to assume a position of methodological objectivity. No claims are made concerning absence of analytical error here. The theory has not yet become received doctrine. For this reason, it remains interesting, but, by the same token, the theorist is likely to blunder.

The book is based on materials that I have presented in a second-year graduate seminar at the University of Virginia from 1957 to 1968. These materials have been modified each year, I hope with gradual improvement. They were first written up in manuscript form in the fall of 1961, when eight lectures were delivered at Cambridge University, where I spent the 1961-62 academic year. The version presented here was actually written during the 1964-65 and 1965-66 academic years, and the summer of 1966. Final revisions were made in late 1966 and early 1967.

The weekly papers that I have required of students in the graduate seminar were essential building blocks in the analysis. My indebtedness to all who participated should be acknowledged, especially in view of the apparent stress on analytical trivia often suggested in the assigned topics. Among the many participants in this seminar over the decade, particular note should be made of Thomas Borcherding, Otto A. Davis, Emilio Giardina, Charles Goetz, Mark Pauly, Charles Plott, Craig Stubblebine, and Richard Wagner, almost all of whom made postdoctoral, postcritical comments on earlier drafts of the full manuscript. Helpful advice for revision also came from J. G. Head of Australian National University, Milton Kafoglis of the University of Florida, David Davies of Duke University, and, at many stages, from Gordon Tullock of Rice University. Detailed and helpful comments for revision were also provided by Tibor Scitovsky, who provided the encouragement to get this book in published form. Mrs. Betty Tillman deserves far more than the usual acknowledgement of appreciation for secretarial assistance, from me especially, but also from all who participated in the community of scholarship that characterized Rouss Hall in the 1960s. Funds made available through a National Science Foundation grant supported my work during the summer of 1966. I should also acknowledge with appreciation the assistance of Subrata Ganguly in preparing the Index.

J. M. B.

• Charlottesville

February, 1967