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Cover of: Incentive Transfer Schemes with Marketable and Nonmarketable Public Services
Hiroshi Osano, Keizo Mizuno, Nobuo Akai

Incentive Transfer Schemes with Marketable and Nonmarketable Public Services

Section: Articles
Volume 166 (2010) / Issue 4, pp. 614-640 (27)
Published 09.07.2018
DOI 10.1628/093245610793524901
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Summary
We examine an incentive transfer scheme in an executive agency system when there are both marketable and nonmarketable public services. We show that because of the incentive transfer scheme, which contributes to the elimination of a government's budget deficit, social welfare is higher in the executive agency system than in a traditional system when the shadow cost of public funds is large. In addition, the scheme is desirable from a welfare viewpoint when the marketable and nonmarketable public services are complements, or when the production technology exhibits a high degree of cost complementarity.