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Redistributive politics with distortionary taxation

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Author Info
Crutzen, Benoît S.Y.
Sahuguet, Nicolas

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Abstract

This paper proposes a first step towards a positive theory of tax instruments. We present a model of redistributive politics that extends those of Myerson [R. Myerson, Incentives to cultivate minorities under alternative electoral systems, Amer. Polit. Sci. Rev. 87 (1993) 856-869] and Lizzeri and Persico [A. Lizzeri, N. Persico, The provision of public goods under alternative electoral incentives, Amer. Econ. Rev. 91 (2001) 225-239]. Two politicians compete in terms of targeted redistributive promises financed through distortionary taxes. We solve for the case of both targetable and non-targetable taxes. We prove that there is an imperfect efficiency-targetability trade off on the tax side. Politicians prefer targetable taxes over non-targetable ones, especially when the latter are less efficient. Yet, targetable taxation is always used even when it is very inefficient compared to non-targetable taxes.

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Publisher Info
Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 144 (2009)
Issue (Month): 1 (January)
Pages: 264-279
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Handle: RePEc:eee:jetheo:v:144:y:2009:i:1:p:264-279

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Web page: http://www.elsevier.com/locate/inca/622869

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Related research
Keywords: Redistributive politics Distortionary taxation;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Becker, Gary S & Mulligan, Casey B, 2003. "Deadweight Costs and the Size of Government," Journal of Law & Economics, University of Chicago Press, vol. 46(2), pages 293-340, October.
    Other versions:
  2. Persson, Torsten & Tabellini, Guido, 1999. "The Size and Scope of Government: Comparative Politics With Rational Politicians," CEPR Discussion Papers 2051, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1121-1161, December. [Downloadable!] (restricted)
    Other versions:
  4. Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2004. "Vote Buying," Discussion Papers 1386, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
    • Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2005. "Vote Buying," Others 0503006, EconWPA. [Downloadable!]
    • Jackson, Matthew O. & Dekel, Eddie & Wolinsky, Asher, 2005. "Vote buying," Working Papers 1215, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  5. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October. [Downloadable!] (restricted)
  6. Alessandro Lizzeri & Nicola Persico, 2005. "A Drawback Of Electoral Competition," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1318-1348, December. [Downloadable!] (restricted)
  7. Kovenock, Dan & Robertson, Brian, 2005. "Electoral Poaching and Party Identification," Purdue University Economics Working Papers 1178, Purdue University, Department of Economics. [Downloadable!]
  8. Alessandro Lizzeri & Nicola Persico, . ""The Provision of Public Goods Under Alternative Electoral Incentives''," CARESS Working Papres 98-08, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences. [Downloadable!]
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  9. Gouveia, Miguel & Oliver, David, 1996. "Voting over flat taxes in an endowment economy," Economics Letters, Elsevier, vol. 50(2), pages 251-258, February. [Downloadable!] (restricted)
  10. Nicolas Sahuguet & Nicola Persico, 2006. "Campaign spending regulation in a model of redistributive politics," Economic Theory, Springer, vol. 28(1), pages 95-124, 05. [Downloadable!] (restricted)
  11. Lizzeri, Alessandro, 1999. "Budget Deficits and Redistributive Politics," Review of Economic Studies, Blackwell Publishing, vol. 66(4), pages 909-28, October. [Downloadable!] (restricted)
  12. Eddie Dekel & Matthew O. Jackson & Asher Wolinksy, 2006. "Vote Buying II: Legislatures and Lobbying," Discussion Papers 1433, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  13. Laslier, Jean-Francois & Picard, Nathalie, 2002. "Distributive Politics and Electoral Competition," Journal of Economic Theory, Elsevier, vol. 103(1), pages 106-130, March. [Downloadable!] (restricted)
  14. Brian Roberson, 2006. "The Colonel Blotto game," Economic Theory, Springer, vol. 29(1), pages 1-24, September. [Downloadable!] (restricted)
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  1. Subhasish M. Chowdhury & Dan Kovenock J. & Roman M. Sheremeta, 2009. "An Experimental Investigation of Colonel Blotto Games," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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