Income Distribution and the Optimal Provision of Local Public Goods

Thomas Aronsson () and Magnus Wikström ()
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Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 510, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This paper analyzes how the distribution of gross income among residents in a locality affects the local provision of public goods. The analysis is based on a two-type model, where the local residents can be either high income earners or low income earners. Local provision is assumed to reflect the actions of a benthamite planner giving equal weight to the utilities of all inhabitants. In this framework, three factors turn out to be particularly important for how the distribution of private income across local residents effects the local provision of public goods: (i) the local means of redistribution and taxation, (ii) the particular form of the local residents' utility functions and (iii) migration across localities.

Keywords: Income distribution; Local public goods (search for similar items in EconPapers)
JEL-codes: H41 H72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind, nep-lab, nep-mic, nep-pbe and nep-pub
Date: 1999-04-30

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Persistent link: http://EconPapers.repec.org/RePEc:hhs:umnees:0510

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