Optimal Taxes and Transfers in a Multilevel Public Sector

Thomas Aronsson and Magnus Wikström

FinanzArchiv: Public Finance Analysis, 2002, vol. 58, issue 2, 158-166

Abstract: This paper analyzes taxes and transfers in an economy with three distinct levels of government. It is assumed that the different levels of government raise revenue through distortionary income taxation, resulting in vertical fiscal externalities. We show how to implement a socially optimal resource allocation when (i) the different levels of government act as Nash competitors to one another, and (ii) when one or several of the governmental entities act as Stackelberg leaders.

JEL-codes: D62 H21 H77 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (9)

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