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Note on the Optimal Size of Government

Author

Listed:
  • Ting Chiung

    (Michigan State University)

Abstract

Since government is a nonprofit organization, I apply firmtheory under zero profit condition to analyze the optimal sizeof government. Government should minimize short­runaverage cost while demand for public service is equal tosupply of public service. The optimal size of governmentimplies (1) tax is minimized under balance budget givenpublic service and (2) budget surplus and budget deficit areinefficient (i.e., balance budget is Pareto optimum)

Suggested Citation

  • Ting Chiung, 2011. "Note on the Optimal Size of Government," European Journal of Business and Economics, Central Bohemia University, vol. 3(0), pages 41-421:3, September.
    • Handle: RePEc:aad:ejbejj:v:3:y:2011:i:0:p:41-42
    DOI: 10.12955/ejbe.v3i0.118
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    More about this item

    Keywords

    GovernmentOptimal Size; Efficiency; Minimum Tax; Budget Balance;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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