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Support for Public Provision with Top-Up and Opt-Out: A Controlled Laboratory Experiment

  • Neil Buckley
  • Katherine Cuff
  • Jeremiah Hurley
  • Stuart Mestelman
  • Stephanie Thomas
  • David Cameron

We empirically test the predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision ('top-up') or forego public provision ('opt-out'). Our laboratory results confirm the predicted majority-preferred tax rate in the mixed financing with top-up treatment, but find significantly higher rates than predicted in the mixed financing with opt-out treatment. Using non-parametric regression analysis, we also explore the relationship between individuals' top-up and opt-out decisions and both their income levels and the implemented tax rates.

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File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2013-15.pdf
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Paper provided by McMaster University in its series Department of Economics Working Papers with number 2013-15.

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Length: 89 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:mcm:deptwp:2013-15
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