At the extreme, imagine a group of individuals who have similar tastes and who live together in a local community, each one of whom places a zero benefit on tennis courts. In such a community, under decentralized, local collective decision making, an election to consider government provision of such a good would receive no votes. In fact, it would be unlikely that any resident would even propose that such an issue be put up for a vote, because a locally provided tennis court would benefit no one in town. If, however, the number of tennis courts per town were decided in a national election, with given tax shares under majority rule, the outcome would be the national median most-preferred number of tennis courts per town.If the preferred number of tennis courts per town in other communities is greater that zero, the resultant equilibrium is likely to be some positive number of tennis courts. This means that residents in the town where no one wants tennis courts, even at zero price, would be forced to submit to construction of tennis courts in their town and to pay taxes to finance those tennis courts. Such an outcome is not efficient...
However, despite that, I still find it remarkable that Professor Hyman's objection to government forcing people to pay for tennis courts they don't want is based on shaky and necessarily incomplete calculations of "social benefit" and "social cost" resulting in "efficient" outcomes. This is the textbook I'm using in my Public Finance class at St. Edward's University and I'll have more quotes from it in the future.
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