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Are User Fees Really Regressive?

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  • George Economides
  • Apostolis Philippopoulos

Abstract

This paper studies the aggregate and distributional implications of introducing user fees for publicly provided excludable public goods into a model with consumption and income taxes. The setup is a neoclassical growth model where agents differ in earnings and second-best policy is chosen by a Ramsey government. Our main result is that the adoption of user fees by the Ramsey government not only increases aggregate efficiency, but it also decreases inequality. This result is in contrast to common view and policy practice.

Suggested Citation

  • George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo.
  • Handle: RePEc:ces:ceswps:_3875
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3875.pdf
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    References listed on IDEAS

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    5. Konstantinos Angelopoulos & Jim Malley & Apostolis Philippopoulos, 2011. "Time-consistent Fiscal Policy under Heterogeneity: Conflicting or Common Interests?," CESifo Working Paper Series 3444, CESifo.
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    Cited by:

    1. George Economides & Dimitris Papageorgiou & Apostolis Philippopoulos & Vanghelis Vassilatos, 2013. "Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications," CESifo Economic Studies, CESifo, vol. 59(3), pages 536-558, September.

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    More about this item

    Keywords

    user fees; Ramsey taxation; efficiency; inequality;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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