Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities

Ming Chang

International Tax and Public Finance, 2000, vol. 7, issue 1, 83-91

Abstract: This paper revisits the question of whether the second-best level of public good provision is lower than the first-best level in a standard model of public good provision with identical consumers. The role played by the complementarities between the public good and the private commodities is clarified. Furthermore, it is shown that the second-best level is indeed below the first-best level if the Hicksian demands for the taxed commodities are independent of the level of public good provision. Copyright Kluwer Academic Publishers 2000

Keywords: public final good; second best; complementarity; Ramsey taxation (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (26)

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DOI: 10.1023/A:1008758130054

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