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Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment

Listed author(s):
  • Buckley, Neil
  • Cuff, Katherine
  • Hurley, Jeremiah
  • Mestelman, Stuart
  • Thomas, Stephanie
  • Cameron, David

This paper presents the results of a revealed-choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision (‘top-up’) or forego public provision (‘opt-out’), but in each case continue to pay income taxes. Our laboratory results confirm behavior is consistent with the predicted majority-preferred tax rate under mixed financing with top-up, but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt-out. Using non parametric regression analysis, we explore the relationship between individuals’ top-up and opt-out decisions and both their income levels and the implemented tax rates.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167268114003291
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 111 (2015)
Issue (Month): C ()
Pages: 177-196

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Handle: RePEc:eee:jeborg:v:111:y:2015:i:c:p:177-196
DOI: 10.1016/j.jebo.2014.12.016
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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