Abstract

The object of this paper is to retrace the steps that led Buchanan from marginal cost pricing to clubs. We claim that the idea individuals could form clubs to finance public goods can be traced back to his first works on public finance, at the end of the 1940s, and relates to the financing of highways and the pricing of their construction and of their use. Very early in his career Buchanan adopted Knut Wicksell’s proposal to use a marginal cost pricing rule even for public goods. The many criticisms raised against this rule led him to replace it with club pricing.