Advancing e-government: Financing challenges and opportunities

As e-government evolves into the transactions stage, governments must grapple with how to finance the development of e-transactions. The authors argue that the externalities effects of electronic transactions suggest they are appropriately financed by some combination of public investment and user charges. We propose a self-financing model adhering to two basic requirements. A flexible pricing framework is the core of the self-financing model, as it embodies both the firm's and the government's perspectives. We assess basic assumptions of the pricing framework using contingent valuation methodology and a statewide survey of more than 400 firms. The empirical estimates we develop of the willingness to pay for e-transactions with state government and the theoretical discussion about the self-financing model form the basis for prescribing policy recommendations.