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The Second-Best Level of a Public Good: An Approach Based on the Marginal Excess Burden

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Author Info
 Gronberg, Timothy
Liu, Liqun
Abstract

This paper studies the second-best level of public goods, a topic first addressed formally by Atkinson and Stern (1974). It goes beyond the existing literature on this "level problem" by identifying the marginal excess burden as a key underlying force behind level comparisons. The propositions in this paper include previous results as special cases. The paper also relates the marginal excess burden condition to consumer behavior and to the complementarity or substitutability between the public good and the taxed private good. Copyright 2001 by Blackwell Publishing Inc.

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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 3 (2001)
Issue (Month): 4 ()
Pages: 431-53
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Handle: RePEc:bla:jpbect:v:3:y:2001:i:4:p:431-53

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  1. Thomas Gaube, 2007. "A note on the link between public expenditures and distortionary taxation," Economics Bulletin, Economics Bulletin, vol. 8(9), pages 1-10. [Downloadable!]
  2. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008. [Downloadable!]
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