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Earmarking: Bundling to Signal Quality

  • Amihai Glazer

    ()

    (Department of Economics, University of California-Irvine)

  • Stef Proost

    ()

    (Faculty of Economics and Applied Economics, Catholic University of Leuven)

Earmarking is a form of bundling in which government adopts a tax policy while specifying the uses of the revenue. This paper explores how bundling can enhance efficiency: it can inform the public of the quality of a program proposed, or of the quality of the agency that will be responsible for designing and implementing the program.We show that policies that appear inefficient in isolation may become justified when bundled.

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File URL: http://www.economics.uci.edu/files/docs/workingpapers/2006-07/Glazer-13.pdf
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Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 060713.

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Length: 15 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:irv:wpaper:060713
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  1. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
  2. Rogoff, Kenneth & Sibert, Anne, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 1-16, January.
  3. Meyer, M.A., 1991. "The Dynamics of Learning with Team Production: Implications for Task Assignment," Papers 30, Stanford - Institute for Thoretical Economics.
  4. Richard Bird & Joosung Jun, 2005. "Earmarking in Theory and Korean Practice," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0515, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  5. Howard Kunreuther & Doug Easterling, 1996. "The role of compensation in siting hazardous facilities," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(4), pages 601-622.
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  9. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
  10. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-43, January.
  11. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The economics of career concerns: part 2 :application to missions and accountability of government agencies," ULB Institutional Repository 2013/9641, ULB -- Universite Libre de Bruxelles.
  12. Anesi, Vincent, 2006. "Earmarked taxation and political competition," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 679-701, May.
  13. Dhillon, Amrita & Perroni, Carlo, 2001. "Tax earmarking and grass-roots accountability," Economics Letters, Elsevier, vol. 72(1), pages 99-106, July.
  14. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, March.
  15. Darren Filson, . "The Dynamics of Resource Allocation in Research Organizations," Claremont Colleges Working Papers 2000-02, Claremont Colleges.
  16. Bos, Dieter, 2000. "Earmarked taxation: welfare versus political support," Journal of Public Economics, Elsevier, vol. 75(3), pages 439-462, March.
  17. Glazer, Amihai & Lohmann, Susanne, 1999. " Setting the Agenda: Electoral Competition, Commitment of Policy, and Issue Salience," Public Choice, Springer, vol. 99(3-4), pages 377-94, June.
  18. David M. Newbery & Georgina Santos, 1999. "Road taxes, road user charges and earmarking," Fiscal Studies, Institute for Fiscal Studies, vol. 20(2), pages 103-132, June.
  19. Brett, Craig & Keen, Michael, 2000. "Political uncertainty and the earmarking of environmental taxes," Journal of Public Economics, Elsevier, vol. 75(3), pages 315-340, March.
  20. James M. Buchanan, 1963. "The Economics of Earmarked Taxes," Journal of Political Economy, University of Chicago Press, vol. 71, pages 457.
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