Within the w e b e econornics hework the optimal level of provision of a public

Within the w e b e econornics hework the optimal

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Within the w e b e econornics hework, the optimal level of provision of a public good is determineci in part by the preferences of the citizens witbui that particular jurisdiction for that public good. The socially optimul state is a condition where the amount of the public good desired and the amount of the public good thot should be provided by the public sector are the same. R s differentiates the weIfâre econornic approach of addressing the potential under-pncing of hear idhutructure fiom other approaches, such as strictly financial assessments of cunent pricing practices. Financial approaches to correct pncing
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initiatives tend to only require costs of municipal seMces to be covered, regardles of what might be ccnsidered the socially optimal level of public service provision, or the distribution of the cost of this service among its citizens. Simply, fiaancial approaches to correct pricing do not reco- problems associated with private market Eailures. Rational Versus The Extra-Rational Aspects Of Municipal Semce Provision The rational versus the extra-rational aspects of the supply process are seldom considered in the traditional discussions of encouraging efficienciw in the use of municipal services.' The administrators that supply the local services, however, inevitably have an important role in ensuring the efficient levels of provision and consumption of public goods and services. As argued by Bailey: [tlhe conventional argument for user-charges, that there will be excess demand for seMces provided free at the point of use (a demand side explanation), is too simplistic in that it ignores the decision-making mechanism which deterrnines supply.9 There might be cases in which politid actors and bureaucracies have interests in ensuring that inefficiencies penist in the provision of municipal services.1° For instance, the over-supply of physical services by a political agency Mght be undertaken as a way of providiag evidence of his or her physical accomplishments. Roads, schools, and water and sewage networks are often considered evidence of the achievernents of a govemment currently in office. Altematively, the theory of seif-serving bureaucrats, wbose interests are directed towards expanding the bureaucracy and guaranteeing jobs and promotions in 8 Decisions ma& by bureaucrats and politicians which are based on issues other than efficiency and equity are considaed eirtm-mtionul. 9 Stephan Bailey. ''User Charges for Urban Services." Uhn S d i e s . Vol. 3 1 . I 994. P. 754. 10 It should be recognized that economic muciels used ta determine the political and bureaumatic optimum, such as Niskanen's model, r e v d d i f f m t objectives between the politician and the bureaucrat. lhe ciifferences in the public goods and semices provision optimums.
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