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Taxation, redistribution and observability in social dilemmas

Daniel Brent (), Lata Gangadharan, Anca Mihut and Marie Claire Villeval ()
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Anca Mihut: GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique

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Abstract: In the presence of social dilemmas, cooperation is more difficult to achieve when populations are heterogeneous because of conflicting interests within groups. We examine cooperation in the context of a non-linear common pool resource game, in which individuals have unequal extraction capacities and have to decide on their extraction of resources from the common pool. We introduce monetary and nonmonetary policy instruments in this environment. One instrument is based on two variants of a mechanism that taxes extraction and redistributes the tax revenue. The other instrument varies the observability of individual decisions. We find that the two tax and redistribution mechanisms reduce extraction, increase efficiency and decrease inequality within groups. The scarcity pricing mechanism, which is a per-unit tax equal to the marginal extraction externality, is more effective at reducing extraction than an increasing block tax that only taxes units extracted above the social optimum. In contrast, observability impacts only the Baseline condition by encouraging free-riding instead of creating moral pressure to cooperate.

Keywords: taxation mechanisms; observability; cooperation; heterogeneity; experiment (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-env, nep-evo, nep-exp, nep-ltv, nep-pbe and nep-pub
Date: 2017
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01609971v2
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Related works:
Working Paper: Taxation, redistribution and observability in social dilemmas (2019)
Working Paper: Taxation, redistribution, and observability in social dilemmas (2019)
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