governmental behavior in representative democracy a synthesis of the theoretical literature what is the impact of bureaucratic behaviors on tax rates what is preferable a bureaucrat or a partisan politician does a flypaper effect occur when lobby groups influence public policies this article tries to answer these questions by analyzing and comparing six different models of public choice 1 the median voter model 2 the leviathan model 3 the slack maximizing model 4 a general model of bureaucracy 5 the partisan politicians model and 6 a general model of lobbying among several results it is shown that the median voter s income and tax share almost always play a significant role in the design of the public good tax package even if the government does not explicitly try to maximize the median voter s utility the article also provides a synthesis of the positive analysis of the flypaper effect

an experimental investigation of the hahn noll revenue neutral auction for emissions licenses abstract this paper reports on three series of laboratory experiments designed to test the performance of the hahn noll revenue neutral auction rna an alternative institution a no rebate uniform price auction upa is also examined as a benchmark in these experiments the rna markets were little different from upa markets in terms of either prices or market efficiencies the two institutions did differ in terms of the distribution of the gains from exchange and of the propensity of bidders to engage in a certain type of overbidding

distributional effects of a carbon tax in broader u s fiscal reform abstract this paper analyzes the distributional implications of an illustrative 15 carbon tax imposed in 2010 on carbon in fossil fuels we analyze its incidence across income classes and regions both in isolation and when combined with measures that apply the carbon tax revenue to lowering other distortionary taxes in the economy consistent with earlier findings we find that a carbon tax is regressive using tax swap simulations we then subtract the burden of other taxes the carbon tax revenue could displace and compute the net effect on households under three assumptions about how capital and labor income might be distributed

are emissions permits regressive grandfathered emissions permits redistribute income to wealthy households by creating firm rents that ultimately accrue to shareholders consequently they can be highly regressive even if the poor do not have large budget shares for polluting goods using an analytical model this paper estimates the burden of emissions permits borne by different income groups under control of power plant emissions of carbon so2 and nox we also compare the burden borne by poor households under permits with that under emissions taxes performance standards technology mandates and input taxes and we show how the social costs of policies differ from efficiency costs when society has aversion to inequality

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

global warming policy a public finance perspective in the last few years a substantial volume of research has considered the design of taxes to slow greenhouse gas emissions as well as the economic effects of such policies in this paper i summarize the insights that have emerged from this work i begin by explaining that while efficiency considerations create a presumption for using coordinated international policies to alter greenhouse gas emissions the prospects for such action are bleak then i focus on the public finance of carbon taxes at the national level considering the design of such taxes as well as their incidence across and within nations next i focus on greenhouse gas emission policies that could be enacted in less developed countries such as the elimination of fossil fuel subsidies and other policies to slow deforestation finally i suggest several promising directions for future study

the distributional incidence of the gasoline tax in chile abstract this paper analyzes the distributional incidence of the excise tax on gasoline in chile using household budget surveys the incidence is calculated with respect to both income and expenditure distributions in order to consider the potential differences between transitory and permanent income the suits index is estimated as a measure of the degree of progressivity of the tax and confidence intervals are calculated using a bootstrap methodology to statistically compare changes in the incidence given changes in the tax the results show that the tax contrary to the evidence for several developed countries is slightly or moderately progressive with a lower degree of progressivity observed in the calculations based on income than those based on expenditure the simulation of the 25 reduction in the tax rate implemented in 2008 shows that in terms of incidence its effect is to reduce the progressivity of the gasoline tax which is the opposite of what was sought by the government with this policy

reforming taxes and raising revenue part of the fiscal solution this paper reviews the fiscal outlook in the united states discusses why revenue increases are a critical aspect of any enduring fiscal solution and outlines constructive policies to reform the tax system and simultaneously raise revenues in particular this paper highlights the merits of curtailing income tax expenditures introducing a value added tax and imposing levies on consumption and production of non renewable energy copyright 2011 oxford university press

taxing consumption and other sins taxes as their primary tools to collect revenue in the rest of the world governments also use income and payroll taxes but rely much more heavily than does the united states on taxing consumption consumption taxes take many forms including general sales taxes value added taxes and excise taxes on the consumption of specific items including gasoline alcohol tobacco products firearms air travel telephone communication and others the u s government does not use a value added tax making the united states unique among high income countries and a rarity in the larger world as of 2004 at least 134 countries rely on value added taxes as a substantial source of funding value added taxes are sophisticated forms of sales taxes in which taxes are withheld by businesses according to value added at every stage of production american states do impose sales taxes on broad categories of consumer purchases but state governments are considerably smaller than national governments and their sales tax rates are very low compared to the value added tax rates used in the rest of the world the united states also imposes unusually low excise taxes even after controlling for total tax collections which are lower in the united states than they are in most high income countries the deliberate social engineering that underlies the selection of certain commodities for unusually high rates of taxation appeals less to americans than to residents of other countries moreover the sin taxes on

why are households that report the lowest incomes so well off we document that households in the uk with extremely low measured income tend to spend much more than those with merely moderately low income this phenomenon is evident throughout three decades worth of microdata and across different employment states levels of education and marital statuses of the likely explanations we provide several arguments that discount over reporting of expenditure and argue that under reporting of income plays the major role in particular by using a dynamic model of consumption and saving and paying special attention to poverty dynamics we show that consumption smoothing cannot explain all the apparent dissaving

distributional effects of taxing transport fuel this paper1 takes as its starting point the observation that fuel prices and thus taxes are important for good management of climate change and other environmental problems to economists this should be no surprise yet it seems that the role of fuel taxation as an instrument of climate policy has not been fully appreciated it is however one of the few policy instruments that since several decades has actually reduced fuel consumption appreciably thanks to taxation mainly in europe and japan carbon emissions are considerably lower than they would have been otherwise in future where carbon emissions are to be cut drastically this instrument will be crucial there is however much opposition to the instrument this opposition uses various arguments for instance that fuel taxes hurt the poor since they are strongly regressive we however find that the choice of country and methodology turns out to be of great consequence we study seven european countries france germany united kingdom italy serbia spain and sweden and do find some evidence of regressivity but the evidence is very weak it does not apply when lifetime income is used and it does not apply to the poorest country in the group the best one line summary is probably that the tax is approximately proportional

motor vehicle insurance rating with pseudo emissions coverage abstract there is general agreement amongst economists and ecologists that transportation is an important contributor to greenhouse gas emissions typical proposals to reduce the demand for transportation and consequently emissions focus on imposing a fuel tax or a direct fee on vehicles this paper outlines the method and advantages of treating the environmental risk as additional pseudo coverage rated under existing property and liability motor vehicle insurance systems

a distributional analysis of the fairtax plan annual and lifetime income considerations dissatisfaction with the current federal tax system is fostering serious interest in the fairtax plan which would replace most of the federal taxes with a national retail sales tax the fairtax is promoted as being progressive but there is considerable skepticism of this claim we examine the distributional effects of the fairtax as well as the current system it intends to replace under both annual income and lifetime income approaches global measures of progressivity suggest that the current federal tax system is progressive while the fairtax is regressive our results are also robust to different assumptions used for estimation

bureau competition and inefficiency abstract this paper evaluates the claim that an increase in bureau competition will improve efficiency in the public supply of services it gives explicit consideration to the property rights characteristics of a public sector market and to the role of legislators as active demanders of bureau output rather than as passive monitors of bureau production the analysis demonstrates that bureau managers prefer nonprice competition to price competition a major prediction of the paper is that greater bureau competition may increase bureau output costs and budgets

the power of the proposal maker in a model of endogenous agenda formation in a distributive setting this study examines a voting procedure for which agenda formation is endogenous it is found not surprisingly that agenda formation is another avenue for strategic manipulation of the voting process and provides the member to first take the floor an asymmetric advantage what is surprising is the degree of this advantage we find that the initial proposal maker earns a share of the fixed resource exceeding 1 for an majority rule and this is regardless of the number of members the voting rule is found to be an effective instrument in at least partially offsetting the power of the proposal maker while maintaining the stability of the voting process

distributional and efficiency impacts of increased us gasoline taxes we examine the impacts of increased us gasoline taxes in a model that links the markets for new used and scrapped vehicles and recognizes the consider able heterogeneity among households and cars household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled we find that each cent per gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0 2

modelling the non market environmental costs and benefits of biodiversity projects using contingent valuation data cv studies rarely ask willingness to accept wta questions yet there are a range of environmentalprojects where there are likely to be potential losersas well as gainers this paper presents evidence fromsix biodiversity projects that the inclusion ofcontingent compensation payments from thoserespondents who preferred the status quo cansubstantially reduce net project benefits even whenthe proportion of losers is relatively small astatistical model for estimating the mean welfaremeasure from dichotomous choice data which allows forboth positive wtp zero wtp and wta is described asmany environmental projects are likely to create bothgainers and losers we recommend that cv analysts giveserious consideration to the collection and analysisof wta data otherwise they risk generating biasedestimates of project benefits

tax incidence when individuals are time inconsistent the case of cigarette excise taxes abstract one of the most cogent criticisms of excise taxes is their regressivity with lower income groups spending a much larger share of their income on goods such as cigarettes than do higher income groups we argue that traditional quantity based measures of incidence are only appropriate under a very restrictive time consistent model of consumption of sin goods a model that is much more consistent with existing evidence on smoking decisions is a time inconsistent formulation where excise taxes on cigarettes serve a self control function that is valued by smokers who would like to quit but cannot this self control function benefits lower income groups more since they have a significantly higher price sensitivity of smoking calibrations show that as a result cigarette taxes are much less regressive than previously assumed and are even progressive for a wide variety of parameter values

economic growth and climate the carbon dioxide problem in contemplating the future course of economic growth in the west scientists are divided between one group crying wolf and another which denies that species existence one persistent concern has been that man s economic activities would reach a scale where the global climate would be significantly affected unlike many of the wolf cries this one in my opinion should be taken very seriously the present article will first give a brief overview of the climatic implications of economic activity with special reference to carbon dioxide and then will present possible strategies for control a more complete report with references to the literature on climatic change is contained in nordhaus 1976 it is thought that the economic activities which most affect climate are agriculture and energy of these the latter is probably more significant is certainly more easily analyzed and will be discussed here in the energy sector emissions of carbon dioxide particulate matter and heat are of significance for the global climate

executive veto and informational strategy a structure induced equilibrium analysis this paper explores the strategic value of incomplete preference revelation for an executive with veto authority within a budgetary process the analysis indicates which forms of veto power can be augmented by the strategic manipulation of information on preferences the lesson of the analysis is that the failure to consider the strategic value of incomplete preference revelation is a methodological shortcoming of standard structure induced equilibrium analysis since without such consideration equilibrium outcomes are subject to misspecification the true power bestowed upon individual political actors by alternative institutions is misunderstood and the informational gamesmanship that is so much a part of the political process is left unexplained

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

a new approach to the spatial theory of electoral competition in his unidimensional model of electoral competition downs argues that voters use party ideology as an informational short cut for forecasting the policies that a party will pursue if elected parties are perceived by voters as points on an ideological axis in the davis hinich multidimensional model on the other hand the axes are real issues and the principal actors are politicians who are modeled as points in the multi issue space this paper reformulates spatial voting theory in terms of a model that connects what we call predictive dimensions with political issues that are salient during a given election campaign this model is both a synthesis and an extension of the downs and davis hinich spatial models we obtain a median voter result for one predictive dimension that is similar to the downs result but with important differences we also obtain results showing the electoral advantage of incumbency and the tendency for incremental change when there is a great deal of heterogeneity in voter perceptions about the candidates

a chinese sky trust distributional impacts of carbon charges and revenue recycling in china abstract the introduction of carbon charges on the use of fossil fuels in china would have a progressive impact on income distribution this outcome which contrasts to the regressive distributional impact found in most studies of carbon charges in industrialized countries is driven primarily by differences between urban and rural expenditure patterns if carbon revenues were recycled on an equal per capita basis via a sky trust the progressive impact would be further enhanced low income mainly rural households would receive more in sky trust dividends than they pay in carbon charges and high income mainly urban households would pay more than they receive in dividends thus a chinese sky trust would contribute to both lower fossil fuel consumption and greater income equality

can permanent income theory explain cross sectional consumption patterns the prediction that consumption income ratios should decline as income rises in cross sectional data is a feature of friedman s 1957 permanent income hypothesis and other consumption smoothing models the theory thus provides a link between longitudinal income data and cross sectional expenditure data given measured income variability and a functional relationship between consumption and permanent income we predict cross sectional expenditure patterns and compare those predictions to actual values our approach cannot explain the actual skewness in consumption income ratios under even the strictest consumption smoothing model which implies that income measurement error or other anomalies are affecting the data

modelling winners and losers in contingent valuation of public goods appropriate welfare measures and econometric analysis contingent valuation is now the most widely used method for valuing non marketed goods in cost benefit analysis yet despite the fact that many externalities manifest themselves as costs to some and benefits to others most studies restrict willingness to pay to being non negative this can result in significant errors in policymaking this paper examines the importance of this explores appropriate welfare measures for assessing losses and gains demonstrates how these can be elicited explicitly highlights the sensitivity of the results of such studies to the econometric specification employed and suggests ways of dealing with it finally the implica tions for policy are examined assessment including passive use values this technique has become the most widely used method for placing values on non marketed goods this paper examines some outstanding issues in relation to the validity of the method as a basis for policy making in particular most studies ignore the fact that many externalities manifest themselves as costs to some and benefits to others in addition the results of contingent valuation studies are often quite sensitive to the econometric specification assumed the significance of these issues is examined techniques for their resolution are outlined and the implications for public policy are highlighted the importance for economists of the debate on the validity of contingent valuation was emphasised in a series of papers from a symposium on the contingent valuation method cvm published in the journal of economic perspectives in 1994 in his paper portney 1994 predicted that whether the economics profession liked it or not the cvm would inevitably play a role in public policy formulation and therefore it was important that economists be aware of the controversies and have their say on the topic portney s prediction was correct and contingent valuation has become a routine approach to valuing environmental goods with hundreds of studies being produced each year 1 the cvm places a value on a change in the provision of a public good by asking households in a survey how much they are willing to pay for the change or the minimum compensation they would require if the change were not to happen the role that contingent valuation studies play in public policy is

is the gasoline tax regressive in the twenty first century taking wealth into account abstract poterba 1991a has much influenced the literature on the distributional effects of carbon pricing poterba argues that the incidence of energy environmental taxes across households is better appreciated if the relative tax burdens are measured against total expenditure interpreted as a proxy for lifetime income instead of annual income this way however since the distribution of total expenditure is structurally more uniform the incidence of energy price increases is always less regressive than when annual income is used this outcome is often taken to lessen the relevance of equity concerns regarding carbon pricing almost twenty five years after poterba 1991a piketty 2014 revived the idea that wealth is a dimension of economic welfare constituting an increasingly important source of inequality we show that omitting wealth in measuring ability to pay means underestimating the regressivity of carbon pricing and its inequity towards younger people using household level data and statistical matching we revisit poterba s application and compare the distributional incidence of the us gasoline tax for different measures of ability to pay total expenditure income and wealth adjusted income regressivity is not a reason to forgo carbon pricing as a cost effective approach to climate mitigation but calls for consideration and compensation of the distributional effects

the implications for households of environmental tax reform etr in europe abstract the paper discusses the distributional implications of environmental tax reform etr for households and presents new results from modelling the impacts of a major etr for the european union the distributional effects arise from the new environmental taxes any tax reductions made as part of the etr the wider macroeconomic impacts from the etr any special provisions in the etr and the environmental benefits from the etr the paper s literature review makes clear that while the impacts from taxes on the household use of energy are very often regressive transport taxes tend not to be although the impacts differ between urban and rural households moreover the net distributional impact is often less regressive or not at all once the wider distributional effects are taken into account residual regressive effects can in principle be removed by further adjustments in the tax or benefits system the modelling results suggest that an etr in europe will actually increase real incomes across the eu as a whole and will not be generally regressive although the results differ by country and for different socio economic groups the political acceptability of etr may depend on the worst effects on these groups being mitigated in some way

structure induced equilibria and perfect foresight expectations this paper extends the work on structure induced equilibria by explicitly considering voters expectations the standard assumption of myopic expectations is contrasted with the alternative assumption of perfect foresight expectations in the institutional setting examined perfect foresight means voters know how the outcome on the first issue in a sequence of two issues conditions majority rule outcomes on the second issue if voters act on this knowledge when voting on the first issue then several important results follow first voters may possess multipeaked preferences defined over the first issue with a majority cycle resulting so that there is no equilibrium to the whole sequence of elections second even if cycling does not result the exact location of the equilibrium involves a broader conspiracy than previously thought a conspiracy of not only preferences and institutional structure but also voters expectations as conditioned by that structure

energy and climate hand in hand financing res e support with carbon revenues abstract in italy the cost of support for renewable electricity res e is largely recovered through the a3 surcharge which weighs heavily on electricity bills using household survey data we show the a3 surcharge is markedly regressive carbon taxation in the non ets sector is envisaged as a means to reduce co2 emissions cost effectively and generate revenue to lower the a3 surcharge a non ets carbon tax would be less regressive than the a3 surcharge and its cost would be more evenly distributed across households we calculate the revenue of a 20 tco2 non ets carbon tax would have allowed a cut in the a3 surcharge of about 68 in 2011 and 39 in 2012 the impact of the carbon tax plus the reduced a3 surcharge would have been less regressive but the cost higher for most households the restrictions imposed in the simulations mean the results are only appropriate to render first round effects of the reform policy relevance in the vast majority of the eu member states the cost of res e support is largely paid by electricity consumers most often through specific surcharges rising electricity prices are a common concern given the implications for competitiveness and equity the member states facing this issue could conveniently address it through environmental tax reforms consistent with the climate and energy package replacing res e surcharges with carbon taxes in the non ets sector would permit cost effective reduction of co2 emissions while allocating the cost of res e support more equitably the difference in regressivity would stem from the different consumption patterns of home fuels including electricity and motor fuels across income distribution a cross country comparison of energy household budget shares proves the structural nature of this difference between home fuels and motor fuels moreover the notion that electricity consumers should pay for res e support is questioned on the grounds that electricity is a basic necessity good and res e support is a means of providing public goods notably energy security and climate protection

lifetime versus annual tax and transfer progressivity sweden 1968 2009 in this paper we analyze the evolution of tax and transfer progressivity in sweden over both annual and lifetime horizons using a rich micro panel covering the period 1968 2009 we calculate tax rates over a cohort s entire working life cycle our main finding is that taxes are considerably less progressive over the lifetime than in any single year social insurance transfers to transitory low income earners account for most of this result we offer a number of robustness checks of the measurement of lifetime incomes and progressivity but none of them changes our overall findings

running against the status quo institutions for direct democracy referenda and allocations over time stylized institutions for direct democracy referenda are examined in a dynamic full information environment with myopic voters competitive agenda median voter processes are contrasted with monopolistic controlled agenda processes by extending existing static analyses to a class of dynamic institutions not previously characterized the status quo reversion rule this highlights the dependence of the progression of real equilibrium allocations over time on institutional structure by delineating the restrictions implied by each institutional form the model explains some persistent empirical regularities in particular a strict ceteris paribus ordering of the magnitudes of budgets by institutional form is derived for a wide portion of the parameter space

long run gasoline demand for passenger cars the role of income distribution it is commonly agreed that the level of income and prices are crucial determinants of the consumption of motor gasoline the respective long run price and income elasticities are regularly calculated using cross sectional models despite the acknowledgement of the role of income distribution it plays no role in intercountry cross sectional models this is due to a lack of appropriate data this paper shows that the omission of distributional characteristics provides misleading elasticities using available distributional measures this paper is referring to an income threshold which is crucial to the acquisition of an automobile it is shown that on the one hand in poor countries an unequal income distribution is needed to enable at least some people to buy automobiles on the other hand in wealthy countries an unequal income distribution would exclude some people from acquiring automobiles hence depending on the income level inequality has a diverging impact on the ability to buy durable goods the second part of this paper develops a pooled 90 country model to examine this approach empirically it could be shown that distribution variables are highly significant to explain the demand for automobiles and motor gasoline moreover the consideration of the distribution of income leads to a considerable decrease in income elasticity values this is mainly due to the positive correlation between income level and income equality within the sample

estimating price elasticities when there is smuggling the sensitivity of smoking to price in canada a central parameter for evaluating tax policies is the price elasticity of demand for cigarettes but in many countries this parameter is difficult to estimate reliably due to widespread smuggling which significantly biases estimates using legal sales data an excellent example is canada where widespread smuggling in the early 1990s in response to large tax increases biases upwards the response of legal cigarette sales to price we surmount this problem through two approaches excluding the provinces and years where smuggling was greatest and using household level expenditure data on smoking these two approaches yield a tightly estimated elasticity in the range of 0 45 to 0 47 we also show that the sensitivity of smoking to price is much larger among lower income canadians in the context of recent behavioral models of smoking whereby higher taxes reduce unwanted smoking among price sensitive populations this finding suggests that cigarette taxes may not be as regressive as previously suggested finally we show that price increases on cigarettes do not increase and may actually decrease consumption of alcohol as a result smuggling of cigarettes may have raised consumption of alcohol as well

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

strategic arms limitation treaties and innovations in weapons technology treaties to limit strategic arms such as those resulting from the strategic arms limitation talks salt are generally viewed as resulting in a reduced level of military spending and an increased level of security for both countries this paper shows that such treaties generally would accelerate the qualitative arms race and could lead to the introduction of new and potentially destabilizing weapon systems thus the result might be an increase in military spending and a decrease in the level of security for both countries this result is supported by a formal model of bureaucratic decision making in which defense bureaus choose between purchases of existing weapons systems or research and development expenditures on new weapons systems the formal model leads to two theorems which identify the conditions under which arms limitation treaties lead to innovations in weapons technology and to increased military spending

alarmist decisions with divergent risk information receipt of multiple sources of risk information ideally should foster sounder decisions under uncertainty this paper s original survey results for environmental risks suggest that the learning process is reasonable in many respects bur it does not accord with a rational bayesian learning model divergent risk assessments from different sources produce extreme violations of rationality as there is inordinate weight on the high risk assessment this alarmist reaction holds for both government and industry information sources this phenomenon may account for the commonly observed phenomenon of public overreaction to highly publicised risks

executive veto and spending limitation positive political economy with implications for institutional choice the consequences of institutional change in the budgetary process are not generally determinate independent of the preferences of political actors nonetheless this study shows for a general class of preference configurations that the legislative branch cannot be made better off by a spending limitation unless the executive is empowered with a line item veto in the absence of executive item veto authority there is no incentive for the legislature to constrain spending

distributional impacts of carbon pricing a general equilibrium approach with micro data for households article i nfo many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices a complete analysis requires taking both effects into account the impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups it is also affected by precise formulation of the policy how is the revenue from carbon pricing distributed as well as the treatment of other government policies e g the treatment of transfer payments what is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups in this paper we incorporate 15 588 households from the u s consumer and expenditure survey data as individual agents in a comparative static general equilibrium framework these households are represented within the mit usrep model a detailed general equilibrium model of the u s economy in particular we categorize households by full household income factor income as well as transfer income and apply various measures of lifetime income to distinguish households that are temporarily low income e g retired households drawing down their financial assets from permanently low income households we also provide detailed within group distributional measures of burden impacts from various policy scenarios

efficiency and equity in two part tariffs the case of residential water rates as first noticed by coase 1946 a standard result in utility regulation is that efficiency requires two part tariffs with marginal prices set to marginal costs and fixed fees equal to each customer s share of fixed costs residential water customers in france face marginal prices for water that average about 8 more than marginal costs under price elasticity estimates that are consistent with previous results in the literature efficiency costs represent around 8 million euros of welfare losses for 2008 even though the impact is fairly small current price schedules are an important pre existing distortion which should be considered when evaluating current taxes aimed at addressing external costs moreover efficiency gains from reformed tariffs could be used to fund water assistance programs focused on financially stressed households

the effects of multiple objectives in the theory of public sector supply this paper incorporates objectives of both legislators and bureaucrats in a model of public sector decisionmaking existing models assume that either bureaucrats control production information and decisions niskanen type models or legislators control production decisions legislative models my model explicitly incorporates imperfect agent behavior and corresponding preferences of both legislators and bureaucrats to reflect the bilateral nature of appropriations the analysis shows that output levels generally differ from politically and socially efficient levels and depend on the relative weights of legislative and bureaucratic interests accordingly niskanen type and legislative models are viewed as special cases of this more general approach

a tale of two tails commuting and the fuel price response in driving abstract pricing greenhouse gases is widely understood as the most efficient approach for mitigating climate change yet distributional effects hamper political acceptance these distributional effects are especially important in transport the fastest growing sector for greenhouse gas emissions using rich data covering the entire population of vehicles and households in denmark this study uncovers an important feature of driving demand two groups of much more responsive households in the lower and upper tails of the work distance distribution we further estimate the causal effect of public transport a critical determinant of the upper tail and show how public transport access can both reconcile differences in fuel price elasticities between the united states and europe and considerably influence the distributional effects of fuel pricing

are the costs of reducing greenhouse gases from passenger vehicles negative energy models suggest that the costs of reducing carbon emissions from transportation are high relative to those for other sectors this paper discusses why taxes or equivalent permit systems to reduce passenger vehicle emissions produce large net benefits rather than costs when account is taken of a their impact on reducing other highway externalities besides carbon and b interactions with the broader fiscal system both of these considerations also strengthen the case for a tax based approach over fuel economy regulation while fiscal considerations strengthen the case for taxes over grandfathered emissions permits the paper also comments on the practical relevance of automobile fuel taxes or their policy equivalents to broader legislation intended to mitigate climate change

tax policy issues in designing a carbon tax a carbon tax is a promising tool for discour aging the greenhouse gas emissions that cause climate change in principle a well designed tax could reduce the risk of climate change minimize the cost of emissions reductions encourage innovation in low carbon technologies and raise new public revenue but designing a real world carbon tax poses significant challenges we analyze those challenges from a public finance perspective emphasizing three tax policy design issues setting the tax rate collecting the tax and using the resulting revenue the benefits of a carbon tax will depend on how policymakers address those issues

negative values in vickrey auctions some people assign negative values for new products sold on laboratory auction blocks i e irradiated meat we explore bidding behavior in two vickrey auctions when people have positive and negative induced values for the good aggregate bidding in the second price auction is precise but biased highest value positive bidders tend to overstate benefits whereas lowest negative bidders understate losses in contrast bidding behavior in the random nth price auction is demand revealing irrespective of induced value but it is imprecise examining on and off margin bidding behavior we cannot conclude that any segments of demand are significantly different than the demand revealing regression line

the equity and efficiency of two part tariffs in u s natural gas markets abstractresidential natural gas customers in the united states face volumetric charges that average about 30 percent more than the marginal cost of gas this inefficient departure from marginal cost pricing allows gas utilities to cover their fixed infrastructure and operating costs proposals for recovering these costs instead through fixed monthly fees are often opposed because of a widespread belief that current rate schedules have desirable distributional consequences using nationally representative household level data we show that the correlation between household income and natural gas consumption is indeed positive but surprisingly weak so current rate schedules are only mildly progressive in part we argue that this is because poor households tend to have larger families and less energy efficient homes we calculate bill impacts under a variety of scenarios and show that even a modest energy assistance program would more than offset the distributional impact of tariff rebalancing for most low

executive veto legislative override and structure induced equilibrium in this study the structure induced equilibrium approach for modeling democratic institutions is extended to allow for the added structural features of executive veto and legislative override a multidimensional model is presented for a budgetary process involving three actors a legislature an appropriations committee and an executive in order to focus attention on the role of the veto and override possibilities simplifying assumptions are made with regard to other aspects of the agenda formation process in particular the committee has monopoly agenda power a closed amendment control rule is operative and perfect foresight expectations are held by the committee and the executive given these assumptions utility maximization by the several actors generates a budget outcome characterized as a structure induced equilibrium the general model is illustrated geometrically with a two dimensional example permitting budget outcomes to be analyzed for various combinations of veto rules and override provisions the analysis demonstrates that budget outcomes are sensitive to alternative specifications of veto rules and override provisions in the illustration executive veto power is shown to vary directly with both the permissiveness of the veto rule and the stringency of the override provision similar relationships however are not found to exist for total budget expenditures

bidding behavior in experimental auctions with positive and negative values abstract we test for consistency between bids from endowment auctions that allow positive or negative bids for an exchange between two items and bids from prior full bidding auctions for the same items results suggest that positive wtp bids in the endowment auction are demand revealing but subjects overbid in absolute value their negative wta values wta bids were lower in a random n th price auction than in a 5th price auction

the distributional implications of a carbon tax in ireland we study the effects of carbon tax and revenue recycling across the income distribution in the republic of ireland in absolute terms a carbon tax of 20 tco2 would cost the poorest households less than 3 week and the richest households more than 4 week a carbon tax is regressive therefore however if the tax revenue is used to increase social benefits and tax credits households across the income distribution can be made better off without exhausting the total carbon tax revenue

monopoly agenda control and asymmetric information this paper extends the romer rosenthal 1978 1979 model of monopoly agenda control to an environment where only the agenda setter knows with certainty the outcome associated with a failed proposal the presence of this asymmetric information implies that any take it or leave it proposal may provide information crucial to the decision calculus of the voters a fact which an optimal proposal strategy will incorporate the equilibrium behavior of the agenda setter and voters is characterized and contrasted with that in the complete information environment and a number of empirical predictions concerning the nature of elections with monopoly controlled agendas are derived

lifetime incidence and the distributional burden of excise taxes this implies that low income households in one year have some chance of being higher income households in other years and significantly affects the estimated distributional burden of excise taxes this paper shows that household expenditures on gasoline alcohol and tobacco as a share of total consumption a proxy for lifetime income are much more equally distributed than expenditures as a share of annual income from a longer horizon perspective excise taxes on these goods are therefore much less regressive than standard analyses suggest this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

the incidence of fuel taxation in india abstract fuel taxes have returned to centre stage as a potential policy instrument for greenhouse gas abatement on the basis of some studies in developed countries critics have complained that a fuel tax would be regressive this paper uses data from a representative household survey covering more than 124 thousand indian households to examine this claim it finds that a fuel tax would be progressive as would a carbon tax using an input output approach it is found that the progressivity results holds good even when one considers indirect consumption of fuel through its use as an intermediate input sensitivity checks allowing for differing price elasticities of demand between rich and poor confirm this result for most of fuels a tax on kerosene is the only fuel tax that is regressive in all situations

measurement of inequality by components of farm household consumption expenditures inequality in consumption levels of families both nationally and internationally has been studied by theil however empirical studies that measure inequality in farm household consumption to our knowledge have not been performed this study measures inequality in farm household consumption in addition the study also measures inequality in consumption based on farm typology and farming region results from this analysis show consumption inequality among farm households is lower than consumption inequality among all other households results indicate that other expenditures component has the highest inequality and food and household supplies component has the lowest inequality further farm typology has information about difference in consumption expenditures the typology is informative when it comes to the components of consumption while the regional decomposition is not

the impact of a carbon tax on inequality abstract climate change and economic inequality are inextricably linked despite widespread agreement among researchers and policymakers that a carbon tax is the most efficient mechanism to curb greenhouse gas emissions such a tax exacerbates inequality since low income households spend a greater share of their income on carbon intensive goods using input output tables and detailed expenditure data for the united states we estimate households carbon footprints and examine the impact of a revenue neutral tax of 50 per ton of co2 on multiple forms of inequality devoting carbon tax revenue to fund a carbon dividend makes the policy progressive minimizes redistribution among households of similar means mitigates group based inequalities and benefits 56 of people including 84 in the bottom half of the distribution while some researchers have dismissed dividends on efficiency grounds we show that the double dividend typically associated with labor tax cuts is insufficient to protect the purchasing power of a majority of americans

addressing negative willingness to pay in dichotomous choice contingent valuation this paper has four purposes first we outline the controversy surroundingthe issue of negative willingness to pay wtp in contingent valuation cv studies second we use monte carlo simulation to examine theperformance of alternative distributionalassumptions in estimating wtp in the presenceof varying proportions of the populationholding negative wtp values we focus ondichotomous choice cv dc cv where negativewtp values may be especially difficult todetect third we extend the simulation toinvestigate the performance of the mixturemodels that have recently been proposed forhandling identifying non positive wtp values fourth we extend the simulation to investigatethe performance of the nonparametric lowerbound turnbull approach results indicate thatthe relative performance of the dc cv modelingalternatives evaluated here which assumepositive wtp varies across the simulationsetting e g proportion of negative wtp butnone can be said to reasonably solve theproblem ex post this underscores theimportance of ex ante efforts to identify ifnegative wtp is likely to be prominent in agiven valuation setting in such cases appropriately handling negative wtp must beaddressed through ex ante survey design andmodeling choices that allow negative wtp

using laboratory experimental auctions in marketing research a case study of new packaging for fresh beef this paper illustrates the use of laboratory experimental auctions in a pretest market research program for new products we review the experimental auctions literature discuss the range of auction mechanisms available and present the advantages and disadvantages of using a particular mechanism for a laboratory pretest market we then present a step by step example of how a theoretically incentive compatible auction mechanism fifth price sealed bid was used in a laboratory pretest market for vacuum packaged beef based on the illustration we discuss the potential for using laboratory experimental auctions in pretest market research we present the limitations that may be encountered in such applications and outline research aimed at improving the behavioral properties of the technique

the taxation of the poor this paper uses microsimulation modeling to estimate the annual burden offederal state and local taxes on the poor in two states we find that in 1988 the average burden of taxation on poorfamilies and individuals was 15 3 percent in massachusetts and 18 percent in new york as most of the burden is due to state and local taxes federal tax reform had only a minor impact on the overall tax burdens faced by the poor though the analysis is for two state we argue that the basic results are applicable for most other states given the high incidence of persistent poverty among those who are poor in any given year we argue that annual burdens provide a good indication of long run burden for a significant proportion of the poor

can carbon taxes be progressive abstract most studies have assessed the distributional impact of carbon taxes through their effects on commodity prices alone while ignoring their impact on individual welfare brought about by changes in factor prices yet the remunerations of capital and labor are not affected by these taxes similarly and their shares in earned incomes are not uniform across households this paper provides a comprehensive analysis of the incidence of carbon taxes on inequality by considering simultaneously the commodity and the income channels we propose a decomposition of the change in individual welfare metrics then we develop a general equilibrium model to assess the impact of carbon taxes on factor and commodity prices and subsequently their distributional impact on households using the lorenz and concentration curves and the gini index our results suggest that changes in factor prices and changes in commodity prices especially those of energy commodities have opposing effects on inequality carbon taxes tend to reduce inequality through the changes in factor prices and tend to increase inequality through the changes in commodity prices hence we find a non monotonic u shaped relationship between carbon taxes and inequality our results suggest that the traditional approach of assessing the impact of carbon taxes on inequality through changes in commodity prices alone may be misleading the findings cast light on the desirability of using both channels in the assessment of carbon taxes on inequality

what is a fair co2 tax increase on fair emission reductions in the transport sector we examine how individual preferences for fair reductions of carbon dioxide co2 emissions affect the support for increases in the co2 tax on gasoline and diesel we assume that people not only care about their own material welfare but also have preferences for fairness in policy design and we explore the implications using original data from a mail questionnaire sent to a representative sample of the swedish population the main result is that fairness in policy design does matter those respondents who adhere to a fairness principle tend to be relatively more positive to increases in the co2 tax one possible explanation for this result is that there is a relatively high degree of reciprocity regarding the origin of emissions and the fairness regarding who should bear the burden of co2 reductions via a split sample analysis we also find that the relative importance of fairness principles is dependent upon whether one uses a car often or not this sheds light on the potential goal conflict between the importance of fairness principles and self interest in the form of a need for private car transportation

automobile externalities and policies this paper discusses the nature and magnitude of externalities associated with automobile use including local and global pollution oil dependence traffic congestion and traffic accidents it then discusses current federal policies affecting these externalities including fuel taxes fuel economy and emissions standards and alternative fuel policies summarizing insofar as possible the welfare effects of those policies finally we discuss emerging pricing policies including congestion tolls and insurance reform and summarize the appropriate combination of policies to address automobile externalities

preference elicitation under oath eliciting sincere preferences for non market goods remain a challenge due to the discrepency between hypothetical and real behavior and false zeros the gap arises because people either overstate hypothetical values or understate real commitments or a combination of both herein we examine whether the traditional real world institution of the solemn oath can improve preference elicitation applying the social psychology theory on the oath as a truth telling commitment device we ask our bidders to swear on their honour to give honest answers prior to participating in an incentive compatible second price auction the oath is an ancillary mechanism to commit bidders to bid sincerely in a second price auction results from our induced valuation testbed treatments suggest that the oath only auctions outperform all our other auctions real and hypothetical in our homegrown valuation treatments eliciting preferences for dolphin protection the oath only design induced people to treat as binding both their experimental budget constraint i e lower values on the high end of the value distribution and participation constraint i e positive values in place of the zero bids used to opt out of auction based on companion treatments we show the oath works through an increase in the willingness to tell the truth due to a strengthening of the intrinsic motivation to do so

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

market structure and casino taxation in tourist resorts this article examines the association of tax effects with market structure for casino gaming we show that if market structure is uncompetitive much of casino taxation falls on tourists whose demand is inelastic relative to supply the tax is likely to be efficient under strong external demand if imposed on oligopoly casinos with a monopoly location in a cross border market the likelihood of economically good taxation is greater under oligopoly than under competition but lower than under monopoly casino taxes should be lowered in a more competitive market with weaker external demand our prediction is consistent with the evidence found from casino tourism development in macao with high gambling taxes

agenda control by budget maximizers in a multi bureau setting while the present extension of the single issue model of agenda control has permitted the examination of a wide array of questions within a consistent overall framework and has generated new insights some qualifications are in order first the analysis like niskanen s and romer and rosenthal s is strictly limited to one form of agenda control take it or leave it offers made relative to some reversion level second each of the bureaus in this extension are single activity bureaus as a result certain types of agenda control that might exist when there are several dimensions to each bureau s activity such as the mix chosen for various sub activities or the spatial distribution of the bureau s output are ignored see denzau and mackay 1980 and mackay and weaver 1979a b for analyses of these types of agenda control for the case of a single bureau third as a point of reference and for expositional simplicity the analysis for the most part was executed with a single decisive voter on all issues as a result certain complexities and perhaps additional ambiguities were avoided finally in an effort to isolate and study the effects of the supply side phenomenon of agenda control a simple traditional model of the demand side of the collective choice process was employed for the simplest demand side passive supply side models this has typically proved quite adequate as models of the collective choice process have become more complex however taking on more strategic features the weaknesses of certain of the standard assumptions implicit in this demand side model become more apparent in particular the assumption that voters vote sincerely and non strategically is likely to be strained by most specifications of the dynamics of the voting process since learning on the part of voters would condition expectations and perhaps alter choice the inclusion of expectations formation into the model of voter behavior would certainly seem at least at the intuitive level to introduce an interesting additional set of constraints on agenda setters that may limit to some extent the expansionary tendencies described in this paper in short each of these qualifications should provide fertile ground for future research

agenda control and budget size an extension of the romer rosenthal model recent work in public choice theory has examined ways in which control of the agenda might be used by interested parties to manipulate voting outcomes plott and levine 1978 romer and rosenthal 1978 mackay and weaver 1979 1981 the agenda can be defined as the set of rules under which collective decisions are to be made in the relevant cases for discussion here these rules impose constraints on the set of options which can actually be put before the voters there is potential value in controlling the agenda because the actual collective choice from a restricted set of options may differ from that which might emerge if voters were allowed to consider a more inclusive set the discussion in this paper is concerned with a particular type of agenda control first examined by romer and rosenthal romer and rosenthal 1979 in their model voters are confronted with a single proposed level of spending on a particular public service and asked to approve or disapprove a simple majority is required for approval if the proposed budget fails to win majority support then the level of spending approved for the preceding year is automatically adopted for the current year the choice before the voters in other words is between the new budget proposal and the status quo suppose a group of relatively high demanders of the public service control the choice of what budget proposal is actually placed before the voters for example the annual budget proposal might be submitted by the bureau charged with supplying the service and said bureau might be dominated by niskanen type budget maximizing bureaucrats under these circumstances those in control of the agenda will seek to submit the largest possible budget which can win majority approval over the status quo romer and rosenthal contributed two key insights into this budget procedure first if the status quo budget is below that most preferred by the median voter then the maximum new budget which can win majority approval is in excess of the median voter s optimum second the smaller is the status quo budget relative to that preferred by the median voter the larger is the maximum budget which can be successfully proposed as an alternative to the status quo consider figure 1 in which is depicted the ordinal ranking of the median voter of various spending levels if s is the status quo budget then b is the maximum