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Public Provision of Private Goods and Equilibrium Unemployment

Author

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  • Thomas Aronsson
  • Mikael Markström
  • Tomas Sjögren

Abstract

This paper deals with public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. The results show that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which may justify either more or less public provision than under perfect competition. The paper also addresses employment-related motives behind public provision of private goods.

Suggested Citation

  • Thomas Aronsson & Mikael Markström & Tomas Sjögren, 2005. "Public Provision of Private Goods and Equilibrium Unemployment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(3), pages 353-367, November.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200511)61:3_353:ppopga_2.0.tx_2-w
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    Cited by:

    1. Thomas Aronsson & David Granlund, 2014. "Present-Biased Preferences and Publicly Provided Private Goods," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(2), pages 169-199, June.
    2. Aronsson, Thomas & Wehke, Sven, 2008. "Public goods, unemployment and policy coordination," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 285-298, May.

    More about this item

    Keywords

    public provision of private goods; nonlinear taxation; unemployment;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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