Rent Redistribution through Provision of Public Goods

The framework of pure theories of international trade, having evolved through analyses of, among other things, interrelationships among factor-intensities of production functions and factor-endowments of nations, has provided a useful basis for analysing various problems of public economics. Harberger’s (1962) analysis of the incidence of the corporation income tax is a classical example.1 The concept of ‘rent-seeking activites’, recently popular among public-choice theorists, finds its forebears in analyses of protective tariffs.2 This chapter is an application of that framework to the analysis of demand and supply of publicly-provided goods and services. It analyses the effects of publicly-supplied goods on income distribution and their consequential impact on the demand for public provision of goods and services. (Hereafter the term ‘public goods’ will be used to refer to all publicly-provided goods and services, including Samuelsonian public goods (Samuelson, 1953) and Musgravian social goods (Musgrave, 1969).