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Subsidies versus public provision of private goods as instruments for redistibution

Author

Listed:
  • BOADWAY, Robin

    () (Queen's University)

  • MARCHAND, Maurice

    () (Center for Operations Research and Econometrics (CORE) and Institut d'Administration et de Gestion (IAG), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

  • SATO, Motohiro

    (Queen's University)

Abstract

The literature on the use of differential commodity taxes/subsidies and that on quantity controls to supplement income taxation have developed separately from each other. The purpose of this paper is to combine these two strands in the standard framework of optimal non-linear income taxation. We start from a simple model in which there are two types of households, the government has access to both subsidy policy and public provision of a good substitutable with leisure, and households can supplement the publicly provided good from the market. We present conditions when optimal policy should involve a mix of these two instruments alongside income taxation or only one of them. We also consider alternative settings, including the extension to many types of households and the inability of households to supplement in-kind transfers.

Suggested Citation

  • BOADWAY, Robin & MARCHAND, Maurice & SATO, Motohiro, 1997. "Subsidies versus public provision of private goods as instruments for redistibution," CORE Discussion Papers 1997071, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:1997071
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-1997.html
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    Cited by:

    1. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    2. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
    3. Augustine A. Osagiede & Virtue U. Ekhosuehi, 2015. "A theoretical framework for determining the appropriate level of subsidy in an economy," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 2, pages 19-34.
    4. Boadway, Robin & Cuff, Katherine, 2001. "A minimum wage can be welfare-improving and employment-enhancing," European Economic Review, Elsevier, vol. 45(3), pages 553-576, March.
    5. Elena Del Rey, 2001. "Economic Integration and Public Provision of Education," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(2), pages 203-218, June.
    6. Sören Blomquist & Vidar Christiansen, 2003. "Is there a Case for Public Provision of Private Goods if Preferences are Heterogeneous? An Example with Day Care," CESifo Working Paper Series 938, CESifo Group Munich.
    7. Alessandro Balestrino, 2000. "Mixed Tax Systems and the Public Provision of Private Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 463-478, August.
    8. Blomquist, Sören & Christiansen, Vidar, 2004. "Welfare Enhancing Marginal Tax Rates: The Case of Publicly Provided Day Care," Arbetsrapport 2004:6, Institute for Futures Studies.
    9. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    10. Buckley, Neil & Cuff, Katherine & Hurley, Jeremiah & Mestelman, Stuart & Thomas, Stephanie & Cameron, David, 2015. "Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 177-196.
    11. repec:eee:poleco:v:48:y:2017:i:c:p:91-103 is not listed on IDEAS
    12. George Economides & Apostolis Philippopoulos & Stelios Sakkas, 2016. "Tuition Fees, as User Prices, and Private Incentives," CESifo Working Paper Series 5991, CESifo Group Munich.
    13. Robin Boadway, 1998. "Redistributing Smarter: Self-Selection, Targeting and Non-Conventional Policy Instruments," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 365-369, September.
    14. Zanola, Roberto, 2000. "Public goods versus publicly provided private goods in a two-class economy," POLIS Working Papers 12, Institute of Public Policy and Public Choice - POLIS.
    15. Neil Buckley & Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Stephanie Thomas & David Cameron, 2013. "Support for Public Provision with Top-Up and Opt-Out: A Controlled Laboratory Experiment," Department of Economics Working Papers 2013-15, McMaster University.
    16. Anne Emblem, 2002. "Redistribution at the Hospital," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 367-378, August.

    More about this item

    Keywords

    in-kind transfers; subsidies; optimal income tax;

    JEL classification:

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

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