Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189030 
Authors: 
Year of Publication: 
1971
Series/Report no.: 
Queen's Economics Department Working Paper No. 44
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
It has long been accepted that consumption (or production) activities which create external benefits to other parties will typically be operated at a sub-optimal level and that subsidies may be used to achieve optimality. The present analysis will deal with an external benefit where the externality is reciprocal between the consumption activities of two individuals and where the benefits are non-rivalrous. A subsidy system may be designed to alter the price of the consumption good so that consumption will be raised to an optimal level. This note will examine the importance of the subsidy transaction and will point out how the number of participants is relevant to the analysis. In particular, it will deal with the sigificance of 'third party subsidies'.
Document Type: 
Working Paper

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