Local Public Finance: An Alternative Perspective
AbstractIn the standard model of local public finance, a welfare-maximizing local authority with an income constraint ought to produce a set of services, user charges and taxes that are Pareto efficient, on the assumption that a higher level of government equalizes the marginal social utilities of everyone's income. In the alternative model of this paper, the higher-level government is assumed to equate marginal social utilities of time, not income, while the local authorities maximize welfare in the face of a time constraint. In this alternative model, unlike the standard model, optimal prices for some types of excludable goods yield consensus over facility size even in a heterogeneous population, and segregation hurts the worse off. Local actions have redistributive effects, while a senior level of government establishes, as usual, the framework for such redistribution.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number nowlan-96-01.
Length: 29 pages
Date of creation: 15 Apr 1996
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Find related papers by JEL classification:
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
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