TASTES, SKILLS, AND LOCAL PUBLIC-GOODS

This paper analyzes optimal club configurations in an economy where different types of labor are complementary in the production of private goods, extending the work of Berglas (Journal of Public Economics, 6, 409-423, 1976). The analysis shows that when labor types are nonessential in production, a homogeneous club configuration may be optimal despite the presence of labor complementarity (the assumption that inputs are essential precluded this outcome in Berglas' model). It is shown that homogeneous clubs are optimal when complementarity is weak or when preferences are substantially different. (C) 1994 Academic Press, Inc.