Inefficient households and the mix of government spending

Dan Anderberg

Public Choice, 2007, vol. 131, issue 1, 127-140

Abstract: A model is presented in which individuals can vote over government subsidies to a private good and over redistributive taxation. The subsidized good is purchased and shared by couples who act noncooperatively, while possibly being altruistic towards each other. The framework allows a separation of the subsidy policy from redistributive policy. In a majority voting equilibrium the subsidy is used exclusively to correct the individuals' spending pattern. The results suggest that spending on private goods should be an important item in government expenditures when there is strong positive income bias in the political process and/or when household decisions are relatively inefficient. Copyright Springer Science+Business Media, LLC 2007

Keywords: Family behavior{; Public Policy; Government expenditure mix (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s11127-006-9109-x

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