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Voters' Tax-Price Perceptions and the Provision of Government Non-marketed Goods

Norman Gemmell ()

The Manchester School of Economic & Social Studies, 1997, vol. 65, issue 5, 513-33

Abstract: This paper addresses the issue of fiscal illusion in the form of voter tax-price misperceptions. Using a simple two-sector, general equilibrium, 'decisive voter' model of government and private goods, it demonstrates that a range of possible voter tax-price perceptions do not yield unambiguous predictions either of excess provision of nonmarketed goods relative to provision via the market mechanism or of excess supply relative to a decisive voter's demand. Outcomes depend on the nature of tax-price misperceptions, the publicness of government goods (and perceptions regarding 'publicness'), population size, and the relative income of the decisive voter. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1997
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Handle: RePEc:bla:manch2:v:65:y:1997:i:5:p:513-33