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Abstract Richard Musgrave introduced the notion of a public good after reading an obscure publication by Lindahl in German in 1910. His great contribution to knowledge was to provide a clear and comprehensive structure for thinking about the process of achieving an "optimal" allocation of resources across public and private goods based individual preferences and the role of government in that process. A number of ambiguities and issues in Musgrave's vision remain only partially resolved including the need to incorporate "higher laws" or community values into the allocation process.
Keywords Public Goods * Merit Wants * Collective Actions
JEL Classification H * H3
1 Introduction
What many find attractive about economics as a discipline is that it has a generally accepted structure for dealing with the issues. There is a dominant paradigm which most of us accept. It is what guides our work whether we are aware of it or not. Richard Musgrave was a major architect of that paradigm. His work attacked head on the most important theoretical questions in the discipline: What is our purpose? What should we do to make the system function better? What is the proper role of government? His career was a reflection of his struggle to answer big questions and to apply the answers.
Economics texts all begin with a definition of the discipline. Case and Fair (2009) settle on "economics is the study of how individuals and societies choose to use the resources that nature and previous generations have provided." Most texts make a further distinction, that between positive and normative economics. While a positive or descriptive economics can be at least conceptually value free, normative economics requires a definition of the criteria that determine what constitutes a good outcome. "How does the system operate?" versus "how should the system operate?"
2 Individual utility and exogenous preferences
The commonly accepted neoclassical paradigm takes the individual or the household as the unit of observation. Wellbeing is based on individual separate utility functions. The utilitarian notion of somehow maximizing total utility, of course, ran into trouble early since utility cannot be measured and interpersonal utility comparisons are impossible. So the discipline turned to ordinal utility and Pareto for the concept of economic efficiency. The concept of economic...