Earmarking: Bundling to Signal Quality

Amihai Glazer and Stef Proost

No 60713, Working Papers from University of California-Irvine, Department of Economics

Abstract: Earmarking is a form of bundling in which government adopts a tax policy while specifying the uses of the revenue. This paper explores how bundling can enhance efficiency: it can inform the public of the quality of a program proposed, or of the quality of the agency that will be responsible for designing and implementing the program.We show that policies that appear inefficient in isolation may become justified when bundled.

Keywords: Earmarking; Asymmetric information; Bureaucracy; Project evaluation (search for similar items in EconPapers)
JEL-codes: D73 D83 H43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-ppm
Date: 2007-02
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Persistent link: http://EconPapers.repec.org/RePEc:irv:wpaper:060713

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