Topping Up of Opting Out? The Optimal Design of Public Provision Schemes
AbstractThere is extensive public provision of private goods in all developed countries. The public provision scheme is often designed so that individuals can opt out but not top up (supplement) the publicly provided quantity/quality. Using an optimal income tax/public provision model, the authors derive the respective conditions under which a public provision scheme should allow or forbid supplementing. Disregarding administrative costs, a system where individuals are not allowed to top up is optimal if the demand for the publicly provided good increases in the amount of leisure available, while a scheme allowing individuals to top up is warranted if the demand decreases with the amount of leisure. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoPaper provided by Uppsala - Working Paper Series in its series Papers with number 1995-13.
Length: 26 pages
Date of creation: 1995
Date of revision:
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PUBLIC GOODS; ECONOMIC MODELS;
Other versions of this item:
- Blomquist, Soren & Christiansen, Vidar, 1998. "Topping Up or Opting Out? The Optimal Design of Public Provision Schemes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 399-411, May.
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