Public Provision of Private Goods and Equilibrium Unemployment

Thomas Aronsson, Mikael Markström and Tomas Sjögren

FinanzArchiv: Public Finance Analysis, 2005, vol. 61, issue 3, 353-367

Abstract: This paper deals with public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. The results show that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which may justify either more or less public provision than under perfect competition. The paper also addresses employment-related motives behind public provision of private goods.

Keywords: public provision of private goods; nonlinear taxation; unemployment (search for similar items in EconPapers)
JEL-codes: H21 H23 J51 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (3)

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Working Paper: Public Provision of Private Goods and Equilibrium Unemployment (2004)
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