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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://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-05/cesifo1_wp1997.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1997.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1997

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Keywords: public goods; cooperative solutions; fairness; egalitarian equivalent solutions;

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References

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  1. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 29(1), pages 25-49, February.
  2. Theodore C. Bergstrom, 2004. "Benefit-Cost in a Benevolent Society," Public Economics, EconWPA 0405006, EconWPA.
  3. MANIQUET, François & SPRUMONT, Yves, 2002. "Fair Production and Allocation of an Excludable Nonrival Good," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2002-04, Universite de Montreal, Departement de sciences economiques.
  4. Mitra, Tapan & Ok, Efe A, 1996. "Personal Income Taxation and the Principle of Equal Sacrifice Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 925-48, November.
  5. Jon R. Neill, 2000. "The benefit and sacrifice principles of taxation: A synthesis," Social Choice and Welfare, Springer, Springer, vol. 17(1), pages 117-124.
  6. 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, Mohr Siebeck, Tübingen, vol. 62(1), pages 28-49, March.
  7. Wolfgang Buchholz & Wolfgang Peters, 2007. "Justifying the Lindahl solution as an outcome of fair cooperation," Public Choice, Springer, Springer, vol. 133(1), pages 157-169, October.
  8. Udo Ebert & Georg Tillmann, 2007. "Distribution-neutral provision of public goods," Social Choice and Welfare, Springer, Springer, vol. 29(1), pages 107-124, July.
  9. Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, Springer, vol. 2(1), pages 1-22, March.
  10. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2007. "On the importance of equity in international climate policy: An empirical analysis," Energy Economics, Elsevier, Elsevier, vol. 29(3), pages 545-562, May.
  11. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, Econometric Society, vol. 55(4), pages 963-76, July.
  12. Udo Ebert, 2003. "Environmental Goods and the Distribution of Income," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 25(4), pages 435-459, August.
  13. Kaul, Inge & Conceicao, Pedro & Le Goulven, Katell & Mendoza, Ronald U. (ed.), 2003. "Providing Global Public Goods: Managing Globalization," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195157413, October.
  14. Hines Jr., James R., 2000. "What is benefit taxation?," Journal of Public Economics, Elsevier, Elsevier, vol. 75(3), pages 483-492, March.
  15. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 111-140, January.
  16. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521477185.
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Cited by:
  1. Bruno Martorano, 2012. "The Impact of Uruguay’s 2007 Tax Reform on Equity and Efficiency," Working Papers - Economics wp2012_06.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

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