Pawns and Queens Revisited: Public Provision of Private Goods when Individuals make Mistakes

Jukka Pirttilä and Sanna Tenhunen

No 1466, CESifo Working Paper Series from CESifo

Abstract: This paper analyses the optimal tax policy and public provision of private goods when individuals differ in two respects: income-earning ability and rationality. Publicly provided goods should be overprovided or subsidised, relative to the decentralised optimum, if society’s marginal valuation of them exceeds the individual valuation and if these goods help relax the self-selection constraints, formulated in a new way. Optimal marginal income tax rates are shown to differ from the standard rules if publicly provided goods and labour supply are related.

Keywords: behavioral economics; optimal taxation; public provision (search for similar items in EconPapers)
JEL-codes: H21 H42 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Pawns and queens revisited: public provision of private goods when individuals make mistakes (2008)
Working Paper: Pawns and Queens Revisited: Public Provision of Private Goods When Individuals Make Mistakes (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1466

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