Collectively Incentive Compatible Tax Systems

Felix Bierbrauer ()
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Felix Bierbrauer: Max Planck Institute for Research on Collective Goods, Bonn

No 2006_24, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This paper assumes that individuals possess private information both about their abilities and about their valuation of a public good. Individuals can undertake collective actions on order to manipulate the tax system and the decision on public good provision. Consequently, an implementable scheme of taxation has to be collectively incentive compatible. If preferences are additively separable, then an implementable tax systems has the following properties: (i) tax payments do not depend on public goods preferences and (ii) there is no scope for a collective manipulation of public goods preferences. For a quasilinear economy, the optimal tax system is explicitly characterized.

Keywords: Optimal Taxation; Public Good Provision; Revelation of Preferences; Information Aggregation (search for similar items in EconPapers)
JEL-codes: D71 D82 H21 H41 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-09
New Economics Papers: this item is included in nep-pbe and nep-pub
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