Guns, Latrines, and Land Reform: Dynamic Pigouvian Taxation

Michael Kremer and Jack Willis

American Economic Review, 2016, vol. 106, issue 5, 83-88

Abstract: Dynamically and statically optimal Pigouvian subsidies and taxes on durables will differ in a growing economy. In a dynamic game, consumers may delay purchasing durables with positive externalities, such as latrines, anticipating greater future subsidies. Governments can most cheaply induce optimal purchasing by commiting to make subsidies temporary. Foreign donors may make commitment impossible, generating delays in private investment that more than fully offset the social benefits of transfers. Anticipated future taxes or regulation of durables with negative externalities, such as guns, may encourage current purchase, potentially causing policymakers who would otherwise prefer taxes or regulation to abandon such policies.

JEL-codes: D62 H21 H23 H71 I18 Q53 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.p20161096
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.aeaweb.org/articles?id=10.1257/aer.p20161096 (application/pdf)
https://www.aeaweb.org/aer/app/10605/P2016_1096_app.pdf (application/pdf)
https://www.aeaweb.org/aer/ds/10605/P2016_1096_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:106:y:2016:i:5:p:83-88

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().