Taxes or Fees? The Political Economy of Providing Excludable Public Goods
AbstractThis 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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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 542.
Date of creation: 2001
Date of revision:
excludable public goods; public provision; voting;
Other versions of this item:
- Kurtis J. Swope & Eckhard Janeba, 2005. "Taxes or Fees? The Political Economy of Providing Excludable Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 405-426, 08.
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