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Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities

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Author Info
Ming Chang
Abstract

This paper revisits the question of whether the second-best level of public good provision is lower than the first-best level in a standard model of public good provision with identical consumers. The role played by the complementarities between the public good and the private commodities is clarified. Furthermore, it is shown that the second-best level is indeed below the first-best level if the Hicksian demands for the taxed commodities are independent of the level of public good provision. Copyright Kluwer Academic Publishers 2000

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File URL: http://hdl.handle.net/10.1023/A:1008758130054
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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 7 (2000)
Issue (Month): 1 (February)
Pages: 83-91
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Handle: RePEc:kap:itaxpf:v:7:y:2000:i:1:p:83-91

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Related research
Keywords: public final good second best complementarity Ramsey taxation

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  1. A. Jesus Sanchez Fuentes & Diego Martinez Lopez, 2008. "Optimization in non-standard problems. An application to the provision of public inputs," Working Papers 08.07, Universidad Pablo de Olavide, Departamento de Economía. [Downloadable!]
  2. Wendner, Ronald, 2008. "Consumption Externalities and Pigouvian Ranking -- A Generalized Cobb-Douglas Example," MPRA Paper 8540, University Library of Munich, Germany. [Downloadable!]
  3. A. Jesus Sanchez Fuentes & Diego Martinez Lopez, 2006. "A new approach to solve non-regular constrained optimization problems. An application to optimal provision of public inputs," Working Papers 06.35, Universidad Pablo de Olavide, Departamento de Economía. [Downloadable!]
  4. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Departamento de Economía, revised Mar 2008. [Downloadable!]
  5. José Manuel González-Páramo & Diego Martínez López, 2002. "Provisión eficiente de inversión pública financiada con impuestos distorsionantes," Economic Working Papers at Centro de Estudios Andaluces E2002/08, Centro de Estudios Andaluces. [Downloadable!]
  6. 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!]
  7. Clive Fraser & Ali al-Nowaihi, 2006. "Comparing the first-best and second-best provision of a club good: an example," Economics Bulletin, Economics Bulletin, vol. 8(4), pages 1-6. [Downloadable!]
  8. Wendner, Ronald & Goulder, Lawrence H., 2008. "Status Effects, Public Goods Provision, and the Excess Burden," MPRA Paper 8260, University Library of Munich, Germany. [Downloadable!]
  9. Ali al-Nowaihi & Clive Fraser, . "Comparing the First-Best and Second-Best Provision of a Club Good: An Example," Discussion Papers in Public Sector Economics 01/8, Department of Economics, University of Leicester. [Downloadable!]
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