Aronsson, Thomas () (Department of Economics, Umeå University) Markström, Mikael () (Department of Economics, Umeå University) Sjögren, Tomas () (Department of Economics, Umeå University)
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This paper concerns public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. We show that, if the labor market is imperfectly competitive, additional mechanisms arise via the self-selection constraint, which may justify either more or less public provision of the private good than under perfect competition. Furthermore, public provision of private goods becomes a tool to influence the employment.
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Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number
628.
Length: 21 pages Date of creation: 27 Feb 2004 Date of revision: Handle: RePEc:hhs:umnees:0628
Contact details of provider: Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden Phone: 090 - 786 61 42 Fax: 090 - 77 23 02 Email: Web page: http://www.econ.umu.se/ More information through EDIRC
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