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How sensitive is the provision of public inputs to specifications?

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Author Info

  • Diego Martinez Lopez

    ()
    (Department of Economics, Universidad Pablo de Olavide)

  • A. Jesus Sanchez Fuentes

    ()
    (Department of Economics, Universidad Pablo de Olavide)

Abstract

This paper studies the sensitivity of provision of public inputs to changes in the specification of technology and consumer preferences. We consider a simple model in which the government, with recourse to three different tax settings (a lump-sum tax, a tax on labour and a tax on economic profit), provides firms with certain productive services. We focus on the numerical results coming from the government optimization problem. We look at several specific cases in which the returns to scale in the production function emerges as a critical issue. Our …findings also address the impact of changes in output elasticity, in consumer preferences and in the number of households on the levels of public input and utility.

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File URL: http://www.upo.es/serv/bib/wps/econ1004.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 10.04.

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Length: 23 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:pab:wpaper:10.04

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Keywords: firm-augmenting public input; factor-augmenting public input; optimal provision;

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Cited by:
  1. A. Sanchez & Diego Martinez, 2011. "Optimization in Non-Standard Problems. An Application to the Provision of Public Inputs," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 37(1), pages 13-38, January.

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