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Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment

Neil Buckley (), Katherine Cuff (), Jeremiah Hurley, Stuart Mestelman (), Stephanie Thomas and David Cameron

Journal of Economic Behavior & Organization, 2015, vol. 111, issue C, 177-196

Abstract: This paper presents the results of a revealed-choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision (‘top-up’) or forego public provision (‘opt-out’), but in each case continue to pay income taxes. Our laboratory results confirm behavior is consistent with the predicted majority-preferred tax rate under mixed financing with top-up, but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt-out. Using non parametric regression analysis, we explore the relationship between individuals’ top-up and opt-out decisions and both their income levels and the implemented tax rates.

Keywords: Publicly provided private good; Mixed financing; Voting experiment (search for similar items in EconPapers)
Date: 2015
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