The Pigovian rule for the optimal public goods provision with distortionary taxation is given a new interpretation. It relates the Pigovian rule to project evaluation rules in terms of shadow prices discussed by Diewert (1983) and Hammond (1986). Our formula for the Pigovian rule is compared with that given by Wildasin (1979) for cases in which indirect taxes are set optimally. The approach introduced in teh present study provides a clear interpretation of Widsasin's result.
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Paper provided by Osaka - Institute of Social and Economic Research in its series Papers with number
297r.
Length: 13 pages Date of creation: 1998 Date of revision: Handle: RePEc:fth:osakae:297r
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Find related papers by JEL classification: H41 - Public Economics - - Publicly Provided Goods - - - Public Goods H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
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