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Tax Competition, Excludable Public Goods and User Charges

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  • Bernd Huber
  • Marco Runkel

Abstract

This paper provides an economic explanation for the increasing reliance of the state on revenue from user charges on excludable public goods. We develop a model with many identical countries. The government of each country levies a capital tax on the domestic production sector and supplies an excludable public good to heterogeneous households. Under immobile capital, the price on the public good is zero. Under mobile capital, in contrast, the countries engage in tax competition and each country chooses a strictly positive price on the public good. With quasi-linear preferences, the reliance on user charges is shown to increase as tax competition becomes more intensive.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-04/cesifo1_wp1172.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1172.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1172

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Keywords: excludable public goods; tax competition;

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References

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  1. Brito, Dagobert L & Oakland, William H, 1980. "On the Monopolistic Provision of Excludable Public Goods," American Economic Review, American Economic Association, American Economic Association, vol. 70(4), pages 691-704, September.
  2. Huber, Bernd, 1999. "Tax competition and tax coordination in an optimum income tax model," Journal of Public Economics, Elsevier, Elsevier, vol. 71(3), pages 441-458, March.
  3. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  4. Blomquist, Sören & Christiansen, Vidar, 2001. "The Role of Prices on Excludable Public Goods," Working Paper Series, Uppsala University, Department of Economics 2001:14, Uppsala University, Department of Economics.
  5. Huber, Bernd, 1999. "Tax competition and tax coordination in an optimum income tax model," Munich Reprints in Economics, University of Munich, Department of Economics 19402, University of Munich, Department of Economics.
  6. Fuest, Clemens & Huber, Bernd & Mintz, Jack, 2005. "Capital Mobility and Tax Competition," Foundations and Trends(R) in Microeconomics, now publishers, now publishers, vol. 1(1), pages 1-62, December.
  7. John O'Hagan & Michael Jennings, 2003. "Public Broadcasting in Europe: Rationale, Licence Fee and Other Issues," Journal of Cultural Economics, Springer, Springer, vol. 27(1), pages 31-56, February.
  8. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo Group Munich.
  9. Robert Tannenwald, 1990. "Taking charge: should New England increase its reliance on user charges?," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Jan, pages 56-74.
  10. Oakland, William H., 1987. "Theory of public goods," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 9, pages 485-535 Elsevier.
  11. Bernd Huber & Marco Runkel, 2004. "Tax Competition, Excludable Public Goods and User Charges," CESifo Working Paper Series 1172, CESifo Group Munich.
  12. Schmitz, Patrick W., 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," MPRA Paper 6549, University Library of Munich, Germany.
  13. Burns, Michael E & Walsh, Cliff, 1981. "Market Provision of Price-excludable Public Goods: A General Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(1), pages 166-91, February.
  14. Fraser, Clive D., 1996. "On the provision of excludable public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 60(1), pages 111-130, April.
  15. Edward Calthrop & Stef Proost, 1998. "Road Transport Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 11(3), pages 335-348, April.
  16. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, Elsevier, vol. 88(6), pages 1065-1091, June.
  17. Wassmer, Robert W. & Fisher, Ronald C., 2002. "Interstate variation in the use of fees to fund K-12 public education," Economics of Education Review, Elsevier, Elsevier, vol. 21(1), pages 87-100, February.
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Cited by:
  1. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo Group Munich.
  2. Hans-Günter Krüsselberg, 2005. "Milton Friedman und der Wissenschaftliche Beirat für Familienfragen Elternkompetenz und Anteilscheine am Schulbudget – Gedanken über Reformpotenziale," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200506, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. Bernd Huber & Marco Runkel, 2004. "Tax Competition, Excludable Public Goods and User Charges," CESifo Working Paper Series 1172, CESifo Group Munich.

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