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Equal Sacrifice and Fair Burden Sharing in a Public Goods Economy

  • Wolfgang Buchholz
  • Wolfgang Peters

Applying a willingness to pay approach known from contingent valuation in environmental economics, we develop an ordinally based measure for the size of individual sacrifice that is connected with an agent's contribution to a public good. We construct a selection mechanism that picks the unique efficient solution among all allocations that have an equal sacrifice as defined in this way. We show that the solution thus obtained correspond to Moulin’s egalitarian equivalent allocation, conforms to both the ability to pay and the benefit principles, and has much in common with the Lindahl equilibrium.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-05/cesifo1_wp1997.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1997.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1997
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  1. Mitra, Tapan & Ok, Efe A, 1996. "Personal Income Taxation and the Principle of Equal Sacrifice Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 925-48, November.
  2. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2007. "On the importance of equity in international climate policy: An empirical analysis," Energy Economics, Elsevier, vol. 29(3), pages 545-562, May.
  3. Kaul, Inge & Conceicao, Pedro & Le Goulven, Katell & Mendoza, Ronald U. (ed.), 2003. "Providing Global Public Goods: Managing Globalization," OUP Catalogue, Oxford University Press, number 9780195157413, March.
  4. Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 1-22, March.
  5. Francois Maniquet & Yves Sprumont, 2002. "Fair Production and Allocation of an Excludable Nonrival Good," Economics Working Papers 0014, Institute for Advanced Study, School of Social Science.
  6. Wolfgang Buchholz & Wolfgang Peters, 2005. "Justifying the Lindahl Solution as an Outcome of Fair Cooperation," CESifo Working Paper Series 1536, CESifo Group Munich.
  7. Hines Jr., James R., 2000. "What is benefit taxation?," Journal of Public Economics, Elsevier, vol. 75(3), pages 483-492, March.
  8. Udo Ebert, 2003. "Environmental Goods and the Distribution of Income," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(4), pages 435-459, August.
  9. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-76, July.
  10. Wolfgang Buchholz & Richard Cornes & Wolfgang Peters, 2006. "Lindahl Equilibrium Versus Voluntary Contribution to a Public Good: The Role of the Income Distribution," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 28-49, March.
  11. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, vol. 108(1), pages 111-140, January.
  12. Udo Ebert & Georg Tillmann, 2007. "Distribution-neutral provision of public goods," Social Choice and Welfare, Springer, vol. 29(1), pages 107-124, July.
  13. repec:cup:cbooks:9780521477185 is not listed on IDEAS
  14. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  15. Theodore C. Bergstrom, 2004. "Benefit-Cost in a Benevolent Society," Public Economics 0405006, EconWPA.
  16. Jon R. Neill, 2000. "The benefit and sacrifice principles of taxation: A synthesis," Social Choice and Welfare, Springer, vol. 17(1), pages 117-124.
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