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Equal sacrifice and fair burden-sharing in a public goods economy

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  • Wolfgang Buchholz

    ()

  • Wolfgang Peters

    ()

Abstract

Applying a willingness to pay approach known from contingent valuation in environmental economics, we develop an ordinally based measure for the size of individual sacrifice that is connected with an agent's contribution to a public good. We construct a selection mechanism that picks the unique efficient solution among all allocations that have an equal sacrifice as defined in this way. We show that the solution thus obtained correspond to Moulin’s egalitarian equivalent allocation, conforms to both the ability to pay and the benefit principles, and has much in common with the Lindahl equilibrium.

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File URL: http://hdl.handle.net/10.1007/s10797-008-9073-0
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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 15 (2008)
Issue (Month): 4 (August)
Pages: 415-429

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Handle: RePEc:kap:itaxpf:v:15:y:2008:i:4:p:415-429

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Web page: http://www.springerlink.com/link.asp?id=102915

Related research

Keywords: Public goods; Cooperative solutions; Fairness; Egalitarian-equivalent solutions; H41;

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  1. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-76, July.
  2. Theodore C. Bergstrom, 2004. "Benefit-Cost in a Benevolent Society," Public Economics 0405006, EconWPA.
  3. Udo Ebert, 2003. "Environmental Goods and the Distribution of Income," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(4), pages 435-459, August.
  4. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  5. Udo Ebert & Georg Tillmann, 2007. "Distribution-neutral provision of public goods," Social Choice and Welfare, Springer, vol. 29(1), pages 107-124, July.
  6. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2006. "On the Importance of Equity in International Climate Policy: An Empirical Analysis," ZEW Discussion Papers 06-42, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Wolfgang Buchholz & Wolfgang Peters, 2005. "Justifying the Lindahl Solution as an Outcome of Fair Cooperation," CESifo Working Paper Series 1536, CESifo Group Munich.
  8. Jon R. Neill, 2000. "The benefit and sacrifice principles of taxation: A synthesis," Social Choice and Welfare, Springer, vol. 17(1), pages 117-124.
  9. Kaul, Inge & Conceicao, Pedro & Le Goulven, Katell & Mendoza, Ronald U. (ed.), 2003. "Providing Global Public Goods: Managing Globalization," OUP Catalogue, Oxford University Press, number 9780195157413.
  10. MANIQUET, François & SPRUMONT, Yves, . "Fair production and allocation of an excludable nonrival good," CORE Discussion Papers RP -1735, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Wolfgang Buchholz & Richard Cornes & Wolfgang Peters, 2006. "Lindahl Equilibrium Versus Voluntary Contribution to a Public Good: The Role of the Income Distribution," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 28-49, March.
  12. Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 1-22, March.
  13. Mitra, T. & Ok, E.A., 1994. "Personal Income Taxation and the Principle of Equal Sacrifice Revisited," Papers 94-29, Cornell - Department of Economics.
  14. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, vol. 108(1), pages 111-140, January.
  15. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, November.
  16. Hines Jr., James R., 2000. "What is benefit taxation?," Journal of Public Economics, Elsevier, vol. 75(3), pages 483-492, March.
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