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An Investigation into Alternative Representations of the Marginal Cost of Public Funds

  • Lars Hokonsen
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    The literature on the marginal cost of public funds (MCF) and the marginal excess burden is presently a very rich one. A problem with this literature, is that several different measures are interpreted as MCF. This paper derives and compares some commonly used measures, and introduces an alternative. Performing a cross-comparison of the various measures seems to be a useful exercise in order to be able to distinguish between which measure is telling us what. Such a taxonomy might clarify the sense in which the different concepts should be used in future writings on this field. Copyright Kluwer Academic Publishers 1998

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    File URL: http://hdl.handle.net/10.1023/A:1008686227749
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    Article provided by Springer in its journal International Tax and Public Finance.

    Volume (Year): 5 (1998)
    Issue (Month): 3 (July)
    Pages: 329-343

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    Handle: RePEc:kap:itaxpf:v:5:y:1998:i:3:p:329-343
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    1. Bovenberg, A. L. & van der Ploeg, F., 1994. "Environmental policy, public finance and the labour market in a second-best world," Journal of Public Economics, Elsevier, vol. 55(3), pages 349-390, November.
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    6. Fullerton, Don, 1991. "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 302-08, March.
    7. Alan J. Auerbach, 1982. "The Theory of Excess Burden and Optimal Taxation," NBER Working Papers 1025, National Bureau of Economic Research, Inc.
    8. Hakonsen, L., 1997. "An Investigation into Alternative Representations of the Average and Marginal Cost of Public Funds," Papers 11/97, Norwegian School of Economics and Business Administration-.
    9. Sandmo, Agnar, 1974. "A Note on the Structure of Optimal Taxation," American Economic Review, American Economic Association, vol. 64(4), pages 701-06, September.
    10. Mayshar, Joram, 1990. "On measures of excess burden and their application," Journal of Public Economics, Elsevier, vol. 43(3), pages 263-289, December.
    11. Charles L. Ballard & Don Fullerton, 1990. "Distortionary Taxes and the Provision of Public Goods," NBER Working Papers 3506, National Bureau of Economic Research, Inc.
    12. Atkinson, Anthony B & Stern, N H, 1974. "Pigou, Taxation and Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 41(1), pages 119-28, January.
    13. Mayshar, Joram, 1991. "On Measuring the Marginal Cost of Funds Analytically," American Economic Review, American Economic Association, vol. 81(5), pages 1329-35, December.
    14. Triest, Robert K, 1990. "The Relationship between the Marginal Cost of Public Funds and Marginal Excess Burden," American Economic Review, American Economic Association, vol. 80(3), pages 557-66, June.
    15. Sandmo, A., 1997. "Redistribution and the marginal Cost of Public Funds," Papers 8/97, Norwegian School of Economics and Business Administration-.
    16. Kay, J. A., 1980. "The deadweight loss from a tax system," Journal of Public Economics, Elsevier, vol. 13(1), pages 111-119, February.
    17. Wildasin, David E, 1984. "On Public Good Provision with Distortionary Taxation," Economic Inquiry, Western Economic Association International, vol. 22(2), pages 227-43, April.
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