Jurisdiction and the Provision of
Excludable Public Goods

Abstract

This paper derives the optimal method of financing and level of provision of an excludable public good when political and economic jurisdictions coincide, and when they differ. The objective of a central planner in the jurisdiction providing the good is to maximize the social welfare of residents of the jurisdiction. The central planner can collect taxes from residents only, but may collect entrance fees from residents and non-residents alike. Four cases are examined: (1) the political and economic jurisdictions coincide, (2) the political jurisdiction contains, but is larger than the economic jurisdiction, (3) the economic jurisdiction contains, but is larger than the political jurisdiction, and (4) the economic and political jurisdictions overlap. For each case, the optimal mix of taxes and fees is derived.