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Taxes or Fees? The Political Economy of Providing Excludable Public Goods

Kurtis Swope () and Eckhard Janeba ()

Journal of Public Economic Theory, 2005, vol. 7, issue 3, 405-426

Abstract: This paper provides a positive analysis of public provision of excludable public goods financed by uniform taxes or fees. Individuals differing in preferences decide, using majority rule, the provision level and financing instrument. The decisive voter has median preferences in a tax regime, but generally has above median preferences in a fee regime. Numerical solutions indicate that populations with uniform or left‐skewed distributions of preferences choose taxes, while a majority coalition of high‐ and low‐preference individuals prefer fees when preferences are sufficiently right skewed. Public good provision and welfare under fees exceeds that under taxes in the latter case.

Date: 2005
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Working Paper: Taxes or Fees? The Political Economy of Providing Excludable Public Goods (2001) Downloads
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