Umbrella Branding and External Certification

Hendrik Hakenes and Martin Peitz

No 2008_10, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: We study the interdependence of optimal tax and expenditure policies. An optimal policy requires that information on preferences is made available. We first study this problem from a general mechanism design perspective and show that efficiency is possible only if the individuals who decide on public good provision face an own incentive scheme that differs from the tax system. We then study democratic mechanisms with the property that tax payers vote over public goods. Under such a mechanism, efficiency cannot be reached and welfare from public good provision declines as the inequality between rich and poor individuals increases.

Keywords: Umbrella branding; certification; signalling (search for similar items in EconPapers)
JEL-codes: D82 L14 L15 M37 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-04
New Economics Papers: this item is included in nep-cta
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Related works:
Journal Article: Umbrella branding and external certification (2009)
Working Paper: Umbrella Branding and External Certification (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2008_10

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