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Tax competition, excludable public goods, and user charges

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  • Huber, Bernd
  • Runkel, Marco

Abstract

This paper provides an explanation for the increasing reliance on revenue from user charges on excludable public goods. We develop a model with many identical countries. The government of each country imposes a source-based tax on capital and supplies an excludable public good to heterogeneous households. Without tax competition, the price on the public good is zero. Tax competition induces each country to choose a positive price. The reliance on user charges turns out to be increasing in the intensity of tax competition measured by the number of countries. A coordinated decrease in user charges is shown to raise welfare in all countries.

Suggested Citation

  • Huber, Bernd & Runkel, Marco, 2009. "Tax competition, excludable public goods, and user charges," Munich Reprints in Economics 19389, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:19389
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    References listed on IDEAS

    as
    1. Bernd Huber & Marco Runkel, 2009. "Tax competition, excludable public goods, and user charges," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(3), pages 321-336, June.
    2. Huber, Bernd, 1999. "Tax competition and tax coordination in an optimum income tax model," Journal of Public Economics, Elsevier, vol. 71(3), pages 441-458, March.
    3. Sören Blomquist & Vidar Christiansen, 2005. "The Role of Prices for Excludable Public Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 61-79, January.
    4. Schmitz, Patrick W, 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," Public Finance = Finances publiques, , vol. 52(1), pages 89-101.
    5. Burns, Michael E & Walsh, Cliff, 1981. "Market Provision of Price-excludable Public Goods: A General Analysis," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 166-191, February.
    6. Fuest, Clemens & Huber, Bernd & Mintz, Jack, 2005. "Capital Mobility and Tax Competition," Foundations and Trends(R) in Microeconomics, now publishers, vol. 1(1), pages 1-62, December.
    7. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(2), pages 269-304, June.
    8. Oakland, William H., 1987. "Theory of public goods," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 9, pages 485-535 Elsevier.
    9. Robert Tannenwald, 1990. "Taking charge: should New England increase its reliance on user charges?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 56-74.
    10. Brito, Dagobert L & Oakland, William H, 1980. "On the Monopolistic Provision of Excludable Public Goods," American Economic Review, American Economic Association, vol. 70(4), pages 691-704, September.
    11. Fraser, Clive D., 1996. "On the provision of excludable public goods," Journal of Public Economics, Elsevier, vol. 60(1), pages 111-130, April.
    12. John O'Hagan & Michael Jennings, 2003. "Public Broadcasting in Europe: Rationale, Licence Fee and Other Issues," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 27(1), pages 31-56, February.
    13. Edward Calthrop & Stef Proost, 1998. "Road Transport Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 335-348, April.
    14. Wassmer, Robert W. & Fisher, Ronald C., 2002. "Interstate variation in the use of fees to fund K-12 public education," Economics of Education Review, Elsevier, vol. 21(1), pages 87-100, February.
    15. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo Group Munich.
    16. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    17. Huber, Bernd, 1999. "Tax competition and tax coordination in an optimum income tax model," Munich Reprints in Economics 19402, University of Munich, Department of Economics.
    18. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
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    Citations

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    Cited by:

    1. Yeti Nisha Madhoo & Shyam Nath, 2014. "Beneficiary charges: The Cinderella of subnational finance," Chapters,in: Taxation and Development: The Weakest Link?, chapter 11, pages 364-402 Edward Elgar Publishing.
    2. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo Group Munich.
    3. Lars P. Feld & Wolfgang Kerber, 2006. "Mehr-Ebenen Jurisdiktionssysteme: Zur variablen Architektur von Integration," Marburg Working Papers on Economics 200605, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Bernd Huber & Marco Runkel, 2009. "Tax competition, excludable public goods, and user charges," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(3), pages 321-336, June.
    5. repec:eee:poleco:v:48:y:2017:i:c:p:91-103 is not listed on IDEAS
    6. George Economides & Apostolis Philippopoulos & Stelios Sakkas, 2016. "Tuition Fees, as User Prices, and Private Incentives," CESifo Working Paper Series 5991, CESifo Group Munich.
    7. Hans-Günter Krüsselberg, 2005. "Milton Friedman und der Wissenschaftliche Beirat für Familienfragen Elternkompetenz und Anteilscheine am Schulbudget – Gedanken über Reformpotenziale," Marburg Working Papers on Economics 200506, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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