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Taxes or Fees? The Political Economy of Providing Excludable Public Goods

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Author Info

  • Kurtis J. Swope
  • Eckhard Janeba

Abstract

This paper provides a positive analysis of public provision of excludable public goods financed by uniform taxes or fees. Individuals differing in preferences decide using majority-rule the provision level and financing instrument. The median preference individual is the decisive voter in a tax regime, while an individual with preferences above the median generally determines the fee in a fee regime. Numerical solutions indicate that populations with uniform or left-skewed distributions of preferences choose taxes, while a majority coalition of high and low preference individuals prefer fees when preferences are sufficiently right-skewed. Public good provision under fees exceeds that under taxes in the latter case.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2001/wp-cesifo-2001-08/cesifo_wp542.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 542.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_542

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Keywords: excludable public goods; public provision; voting;

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References

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  1. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
  2. Fraser, Clive D., 1996. "On the provision of excludable public goods," Journal of Public Economics, Elsevier, vol. 60(1), pages 111-130, April.
  3. Robert W. Helsley & William C. Strange, 1991. "Exclusion and the Theory of Clubs," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 889-99, November.
  4. Helsley, Robert W. & Strange, William C., 1998. "Private government," Journal of Public Economics, Elsevier, vol. 69(2), pages 281-304, June.
  5. Burns, Michael E & Walsh, Cliff, 1981. "Market Provision of Price-excludable Public Goods: A General Analysis," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 166-91, February.
  6. Silva, Emilson C. D. & Kahn, Charles M., 1993. "Exclusion and moral hazard : The case of identical demand," Journal of Public Economics, Elsevier, vol. 52(2), pages 217-235, September.
  7. Laux-Meiselbach, Wolfgang, 1988. "Impossibility of exclusion and characteristics of public goods," Journal of Public Economics, Elsevier, vol. 36(1), pages 127-137, June.
  8. Brito, Dagobert L & Oakland, William H, 1980. "On the Monopolistic Provision of Excludable Public Goods," American Economic Review, American Economic Association, vol. 70(4), pages 691-704, September.
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Citations

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Cited by:
  1. Kira Boerner & Silke Uebelmesser, 2007. "Migration and the welfare state: The economic power of the non-voter?," International Tax and Public Finance, Springer, vol. 14(1), pages 93-111, February.
  2. Fuest, Clemens & Kolmar, Martin, 2007. "A theory of user-fee competition," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 497-509, April.
  3. Kemnitz, Alexander, 2010. "A simple model of health insurance competition," Dresden Discussion Paper Series in Economics 09/10, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  4. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo Group Munich.
  5. Clemens Fuest & Martin Kolmar, 2013. "Endogenous free riding and the decentralized user-fee financing of spillover goods in a n-region economy," International Tax and Public Finance, Springer, vol. 20(2), pages 169-191, April.

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