Abstract
The purpose of this paper is to extend the theory of clubs model of how jurisdictions select the level of local public goods to include innovation in their production and delivery systems. The results of the analysis indicate that cost-sharing rules influence not only the levels of public goods provided and the size of the community, but also the incentives to innovation. Moreover, the objective function implied by the theory of clubs behavioral model calls for innovational choices which are not Pareto efficient.
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