IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/179.html
   My bibliography  Save this paper

Public sector pricing in a fiscal context

Author

Listed:
  • Heady, Christopher

Abstract

Administered prices should deviate from marginal cost if they are to be used as instruments to generate revenue. The analysis is based on the Bank's two-step approach to public sector pricing: first calculating marginal cost, and then adjusting it to account for other factors. The aim is to show how those adjustments should be made to account for fiscal concerns. The appropriate basis for pricing in the first step, the author contends, is a weighted average of short and long term marginal costs. Deviations from marginal cost in the second step are shown to depend on their revenue raising, distortionary, and distributional effects. The author argues that it is better to raise prices above marginal cost through taxes than by raising the price received by the enterprise. The author describes how to set charges in the face of metering difficulties, stressing the need to set unifrom charges and to make indirect charges on inputs.

Suggested Citation

  • Heady, Christopher, 1989. "Public sector pricing in a fiscal context," Policy Research Working Paper Series 179, The World Bank.
    • Handle: RePEc:wbk:wbrwps:179
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1989/04/01/000009265_3960927200509/Rendered/PDF/multi_page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dixit, Avinash K & Newbery, David M G, 1985. "Setting the Price of Oil in a Distorted Economy," Economic Journal, Royal Economic Society, vol. 95(380a), pages 71-82, Supplemen.
    2. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. Hughes, G A, 1986. "A New Method for Estimating the Effects of Fuel Taxes: An Application to Thailand," The World Bank Economic Review, World Bank, vol. 1(1), pages 65-101, September.
    4. Heady, Christopher J. & Mitra, Pradeep K., 1982. "Restricted redistributive taxation, shadow prices and trade policy," Journal of Public Economics, Elsevier, vol. 17(1), pages 1-22, February.
    5. A. J. Auerbach & M. Feldstein (ed.), 1985. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 1, number 1.
    6. Feldstein, Martin S, 1972. "Distributional Equity and the Optimal Structure of Public Prices," American Economic Review, American Economic Association, vol. 62(1), pages 32-36, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Assaf Razin & Efraim Sadka, 1990. "Integration of International Capital Markets: The Size of Government and Tax Coordination," NBER Chapters, in: Taxation in the Global Economy, pages 331-356, National Bureau of Economic Research, Inc.
    2. David Madden, 1995. "An analysis of indirect tax reform in Ireland in the 1980s," Fiscal Studies, Institute for Fiscal Studies, vol. 16(1), pages 18-37, May.
    3. Ahlberg, Joakim, 2006. "Optimal Taxation of Intermediate Goods in the Presence of Externalities: A Survey Towards the Transport Sector," Working Papers 2006:3, Swedish National Road & Transport Research Institute (VTI).
    4. Eskeland, Gunnar S., 2000. "Public expenditures and environmental protection : when is the cost of funds irrelevant?," Policy Research Working Paper Series 2507, The World Bank.
    5. Tim Besley & Rohini Pande, 1998. "Read my lips: the political economy of information transmission," IFS Working Papers W98/13, Institute for Fiscal Studies.
    6. David S. Lee & Pauline Leung & Christopher J. O’Leary & Zhuan Pei & Simon Quach, 2021. "Are Sufficient Statistics Necessary? Nonparametric Measurement of Deadweight Loss from Unemployment Insurance," Journal of Labor Economics, University of Chicago Press, vol. 39(S2), pages 455-506.
    7. David Albouy & Andrew Hanson, 2014. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," Tax Policy and the Economy, University of Chicago Press, vol. 28(1), pages 63-96.
    8. Brita Bye & Karine Nyborg, 1999. "The Welfare Effects of Carbon Policies: Grandfathered Quotas versus Differentiated Taxes," Discussion Papers 261, Statistics Norway, Research Department.
    9. Randall Holcombe, 2005. "Government growth in the twenty-first century," Public Choice, Springer, vol. 124(1), pages 95-114, July.
    10. Ant—nio Afonso & Ludger Schuknecht & Vito Tanzi, 2023. "The size of government," Chapters, in: António Afonso & João Tovar Jalles & Ana Venâncio (ed.), Handbook on Public Sector Efficiency, chapter 1, pages 6-31, Edward Elgar Publishing.
    11. Deb, Rajat & Razzolini, Laura & Seo, Tae Kun, 2003. "Strategy-proof cost sharing, ability to pay and free provision of an indivisible public good," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 205-227, April.
    12. Gaspar, Ví­tor & Afonso, António, 2006. "Excess burden and the cost of inefficiency in public services provision," Working Paper Series 601, European Central Bank.
    13. Bird, Richard, 2010. "Taxation and Development," World Bank - Economic Premise, The World Bank, issue 34, pages 1-5, September.
    14. Lawrence H. Goulder, 1994. "Energy Taxes: Traditional Efficiency Effects and Environmental Implications," NBER Chapters, in: Tax Policy and the Economy, Volume 8, pages 105-158, National Bureau of Economic Research, Inc.
    15. Efraim Benmelech & Tobias J. Moskowitz, 2010. "The Political Economy of Financial Regulation: Evidence from U.S. State Usury Laws in the 19th Century," Journal of Finance, American Finance Association, vol. 65(3), pages 1029-1073, June.
    16. Espinosa Acuña, Óscar A. & Vaca González, Paola A. & Avila Forero, Raúl A., 2013. "Elasticidades de demanda por electricidad e impactos macroecon_omicos del precio de la energía eléctrica en Colombia || Elasticity of Electricity Demand and Macroeconomics Impacts of Electricity Price," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 16(1), pages 216-249, December.
    17. Kalina Koleva, 2005. "Seeking for an optimal tax administration: the efficiency costs’ approach [A la recherche de l'administration fiscale optimale : l'approche par les coûts d'efficience]," Post-Print halshs-00195354, HAL.
    18. Andres Erosa, 2001. "Financial Intermediation and Occupational Choice in Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 303-334, April.
    19. Alessandra Casarico & Luca Micheletto & Alessandro Sommacal, 2015. "Intergenerational transmission of skills during childhood and optimal public policy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 353-372, April.
    20. Schaefer, Thilo & Peichl, Andreas, 2006. "Documentation FiFoSiM: integrated tax benefit microsimulation and CGE model," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 06-10, University of Cologne, FiFo Institute for Public Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.