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Merit goods provision and optimal tax evasion

Author

Listed:
  • ROSELLA LEVAGGI

    () (DIPARTIMENTO DI SCIENZE ECONOMICHE -UNIVERSITA' DI BRESCIA)

  • FRANCESCO MENONCIN

    () (DIPARTIMENTO DI SCIENZE ECONOMICHE - UNIVERSITA' DI BRESCIA)

Abstract

In a recent article Davidson, Lawrence and Wilson propose a model showing that, in the presence of distortionary taxation and goods of different quality, tax evasion can be an optimal device. Here, we show that this result, although quite interesting, cannot be generalised to a framework where Government activity consists of supplying merit goods and levying taxes to finance their provision.

Suggested Citation

  • Rosella Levaggi & Francesco Menoncin, 2008. "Merit goods provision and optimal tax evasion," Economics Bulletin, AccessEcon, vol. 8(7), pages 1-3.
  • Handle: RePEc:ebl:ecbull:eb-08h20003
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume8/EB-08H20003A.pdf
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    References listed on IDEAS

    as
    1. Davidson, Carl & Martin, Lawrence W. & Wilson, John D., 2005. "Tax evasion as an optimal tax device," Economics Letters, Elsevier, vol. 86(2), pages 285-289, February.
    2. Rosella Levaggi, 2007. "Tax Evasion and the Cost of Public Sector Activities," Public Finance Review, , vol. 35(5), pages 572-585, September.
    3. Davidson, Carl & Martin, Lawrence & Wilson, John Douglas, 2007. "Efficient black markets?," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1575-1590, August.
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods

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