Variable rate subsidies: the inefficiency of in-kind transfers revisited
The inefficiency of fixed rate consumer price subsidies, relative to cash transfers, is one of the best-known propositions in welfare economics. It has also been used to show that matching grants are a more inefficient intergovernmental aid than are lump sum grants. Furthermore, the cost of fixed rate subsidies cannot be controlled without providing a “cap” beyond which amount no subsidy is received. This paper reports, both qualitatively and quantitatively, that a broad class of variable rate price subsidies also dominates fixed rate subsidies on both counts. The relative inefficiency of matching grants compared to the variable rate Federal General Revenue Sharing program is estimated.
|Date of creation:||1983|
|Date of revision:|
|Contact details of provider:|| Postal: 90 Hennepin Avenue, P.O. Box 291, Minneapolis, MN 55480-0291|
Phone: (612) 204-5000
Web page: http://minneapolisfed.org/
More information through EDIRC
|Order Information:|| Web: http://www.minneapolisfed.org/pubs/ Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Waldauer, Charles, 1973. "Grant Structures and Their Effects on Aided Government Expenditures: An Indifference Curve Analysis," Public Finance = Finances publiques, , vol. 28(2), pages 212-26.
- Harvey S. Rosen, 1978.
"The Measurement of Excess Burden with Explicit Utility Functions,"
in: Research in Taxation, pages 121-135
National Bureau of Economic Research, Inc.
- Rosen, Harvey S, 1978. "The Measurement of Excess Burden with Explicit Utility Functions," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S121-35, April.
- Stutzer, Michael J., 1982. "Another note on deadweight loss," Journal of Public Economics, Elsevier, vol. 18(2), pages 277-284, July.
- Kay, J. A., 1980. "The deadweight loss from a tax system," Journal of Public Economics, Elsevier, vol. 13(1), pages 111-119, February.
When requesting a correction, please mention this item's handle: RePEc:fip:fedmsr:76. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Janelle Ruswick)
If references are entirely missing, you can add them using this form.