The signaling effect of tax policy
AbstractThe paper focuses on the signaling value of a tax when agents are less informed than the government on the effect of their consumption. The policy making process is analyzed as a game in which the government wants to influence consumers' behaviors through tax policy, consumers being rational and Bayesian. The marginal cost of public funds induces the government to provide biased information to pursue budgetary objectives. We analyze the tax distortion that is required for credibility.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 500.
Date of creation: 2004
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Other versions of this item:
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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