a dynamic tiebout theory of voluntary vs involuntary provision of public goods this paper considers a dynamic model of tiebout like migration between communities that utilize distinct allocation procedures for public goods at issue is whether voluntary or compulsory procedures are more likely to prevail over time we model infinitely lived individuals who make repeated sequential location decisions over one of two communities each community uses a distinct mechanism for allocating public goods the first is one in which contributions are given voluntarily by the citizenry of the community the second is a compulsory scheme by which individuals are taxed proportionately to wealth with the tax determined by a majority vote opportunities to accumulate wealth exist via accumulation of public capital the markov perfect equilibria of the dynamic game are studied our main result shows that when accumulated wealth converges to a steady state individuals locational choices eventually select the involuntary provision mechanism this holds despite the fact that unanimous location in the voluntary provision community may in many cases remain as a nash equilibrium of the static game each period we also describe conditions under which voluntary provision survives these conditions require that accumulation of capital fails to decrease wealth dispersion over time the results are shown to be consistent with findings relating inequality to school choice

analysis of policies to reduce oil consumption and greenhouse gas emissions from the us transportation sector abstract even as the us debates an economy wide co 2 cap and trade policy the transportation sector remains a significant oil security and climate change concern transportation alone consumes the majority of the us s imported oil and produces a third of total us greenhouse gas ghg emissions this study examines different sector specific policy scenarios for reducing ghg emissions and oil consumption in the us transportation sector under economy wide co 2 prices the 2009 version of the energy information administration s eia national energy modeling system nems a general equilibrium model of us energy markets enables quantitative estimates of the impact of economy wide co 2 prices and various transportation specific policy options we analyze fuel taxes continued increases in fuel economy standards and purchase tax credits for new vehicle purchases as well as the impacts of combining these policies all policy scenarios modeled fail to meet the obama administration s goal of reducing ghg emissions 14 below 2005 levels by 2020 purchase tax credits are expensive and ineffective at reducing emissions while the largest reductions in ghg emissions result from increasing the cost of driving thereby damping growth in vehicle miles traveled

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

a tiebout theory of public vs private provision of collective goods abstract we study whether coercive public provision or voluntary private provision of public goods can survive when individuals who vote with their feet can choose between communities that differ in the way that public goods are provided we obtain the following findings i an equilibrium always exists in which all individuals migrate to the community which uses voluntary provision ii under very robust conditions on preferences and income distribution an equilibrium exists in which all individuals migrate to the community which uses coercive provision iii interior equilibria in which collections of individuals move to both communities exist when income distribution is sufficiently polarized such equilibria are shown to be stratified richer individuals migrate to the community with voluntary provision while poorer individuals reside in the public provision community in the case where there are two types of wealth endowments existence of stratified equilibria seems to require a negative trade off between the wealth ratio of the rich to the poor and the numerical ratio of rich to poor in society

equality of opportunity and optimal cash and in kind policies abstract this paper examines the argument for public provision of certain private goods like education and health based on equality of opportunity by studying the utility possibility frontier of a society in which there is a concern for the distribution of these goods a given quality of education or health services can be consumed for free in the public sector but people can opt out and purchase their desired quality levels in the private sector some of the conclusions are i a pure cash transfer is optimal when the utility redistribution is either sufficiently small or large ii if and only if both the equality of opportunity concern and the utility redistribution are large enough can an in kind program which attracts the whole population be justified iii even when everybody chooses the in kind program it may be optimal to perform some additional utility redistribution by increasing the size of such program

public provision of private child goods abstract this paper analyzes the public provision of private goods for children in a politico economic model with endogenous fertility the government provides every child with goods that can also be purchased by parents in private markets and the level of provision is determined by majority rule households with many children benefit from the public provision more than those with fewer children thus a political conflict arises between them the distribution of the number of children across households which is a crucial factor for determining which group is politically dominant is endogenously determined by households fertility decision the sequential interaction between fertility and political decisions might lead to multiple equilibria equilibrium with high fertility and low private public spending ratio and equilibrium with low fertility and high private public spending ratio our model could explain the large differences in fertility and structure of child related spending across countries

buying votes vs supplying public services political incentives to under invest in pro poor policies this paper uses unique survey data to provide for the first time in the literature direct evidence that vote buying in poor economies is associated with lower provision of public services that disproportionately benefit the poor various features of the data and the institutional context allow the interpretation of this correlation as the equilibrium policy consequence of clientelist politics ruling out alternate explanations such as for example poverty driving both vote buying and health outcomes the data come from the philippines a country context that allows for measuring vote buying during elections and services delivered by the administrative unit controlled by winners of those elections the data reveal a significant robust negative correlation between vote buying and the delivery of primary health services in places where households report more vote buying government records show that municipalities invest less in basic health services for mothers and children and quite strikingly as a summary measure of weak service delivery performance a higher percentage of children are severely under weight

in kind transfers self selection and optimal tax policy abstract this paper examines the role of public provision of goods as a redistributive mechanism when tax policies are designed optimally on the basis of the information available to the government we characterize pareto efficient allocations that are attainable through the tax policy and derive the conditions under which public provision will enhance welfare above the maximum that can be achieved through a mix of a general income tax and commodity taxes price subsidies first when there are two produced goods we prove that public provision is always pareto improving the improvement is achieved through changing individuals actual consumption levels second with no restrictions on the number of goods we derive a sufficient condition for public provision to be pareto improving this is achieved by weakening self selection constraints so that welfare improving tax changes are made possible suitable examples include provision of day care basic health care and rights to a minimum old age pension

environmental accounting for pollution in the united states economy this study presents a framework to include environmental externali ties into a system of national accounts the paper estimates the air pollution damages for each industry in the united states an inte grated assessment model quantifies the marginal damages of air pol lution emissions for the us which are multiplied times the quantity of emissions by industry to compute gross damages solid waste com bustion sewage treatment stone quarrying marinas and oil and coal fired power plants have air pollution damages larger than their value added the largest industrial contributor to external costs is coal fired electric generation whose damages range from 0 8 to 5 6 times value added jel e01 l94 q53 q56

economics and policy preferences causal evidence of the impact of economic conditions on support for redistribution and other ballot proposals abstract using california ballot proposition returns and exogenous shifts to labor demand we provide the first large scale causal evidence of the impact of economic conditions on policy preferences consistent with economic theory we find that positive economic shocks decrease support for redistributive policies more notably we find evidence of a need for cognitive consistency in voting behavior as economic shocks have a smaller significant impact on voting on noneconomic ballot issues while we also demonstrate that positive shocks decrease turnout we present evidence that our results reflect changes in the electorate s preferences and not simply to its composition

why voters may prefer congested public clubs governmental facilities for such services as education health and transportation are often small of poor quality and overcrowded even when the costs are spread among all taxpayers we also find that governments may subsidize private facilities providing the same services or may charge admission fees at public facilities we explain these phenomena with a model which considers two types of people rich and poor a majority consisting of poor people may purposely build small and low quality facilities to discourage use by the rich thereby lowering taxes for the same reason the poor may benefit from an admission fee at public clubs or even from a subsidy to private clubs they do not use

nature of transfers income tax function and empirical estimation of elasticity of taxable income for brazil abstractthis article aims to estimate the elasticity of taxable income eti taking into account the nature of transfers and their use as a redistribution package involving cash and in kind transfers to households in brazil our contributions are twofold first we provide a simple model with balanced budget government that reveals the role played by cash and in kind transfers on the labour supply and income tax revenues thereof next in order to estimate eti in the presence of cash and in kind transfers brazilian population surveys pesquisa nacional por amostra de domicilios pnad are used to explore a limited tax reform that was implemented between 1997 and 1998 this reform only affected the higher income tax bracket our findings suggest that in kind cash transfers are positively negatively associated with reported taxable income and precise estimation of eti requires estimates of both types of transfers last we estimate the eti for brazil in the range from 0 4 to 1 3 not different fro

income distribution and price controls targeting a social safety net during economic transition abstract during the ongoing post communist economic transitions the relative well being of many people is changing rapidly and governments are not well positioned to accurately measure individual living standards under such circumstances continued price controls over basic consumer goods within the state sector and the associated queuing can form a serviceable device for targeting poor people for subsidies with a fixed price state sector and free price parallel markets rich people might choose to avoid queues and shop in the free markets while poor people would prefer to pay low nominal prices and queue in the state sector the targeting of subsidies through queues therefore can be accomplished even if the government has no information concerning individual income or living standards when the alternative to price controls is a poorly targeted explicit social safety net the resource cost of queues might be more than offset by an improvement in the targeting of subsidies

market and public provision in the presence of human capital externalities for many goods and services such as health education legal services police protection the cost incurred by an individual supplier for providing quality is affected by the human capital of her colleagues the paper shows that this human capital externality is crucial to determine whether such goods and services should be privately or publicly provided public and private provisions give individuals different incentives to acquire human capital and the paper shows that either may be socially preferable depending on the nature of the human capital externality private provision of the final goods and services gives stronger incentives to human capital acquisition and may therefore be socially preferable if own human capital and one s colleagues human capital are substitutes and if suppliers with high human capital benefit more than suppliers with low human capital from their colleagues human capital but not excessively so

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

transfers in cash and in kind theory meets the data we review theoretical explanations for in kind transfers in light of the limited empirical evidence after reviewing the traditional paternalistic arguments we consider explanations based on imperfect information and self targeting we then discuss the large literature on in kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the samaritan s dilemma pecuniary effects credit constraints asymmetric information amongst agents and political economy considerations our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in kind transfer programs but that some of the other arguments may apply to specific cases political economy considerations must also be part of the story

a political economy theory of partial decentralization we revisit the classic problem of tax competition in the context of federal nations and derive a positive theory of partial decentralization a capital poor median voter chooses to use redistributive capital taxes to provide public goods the expectation of high capital taxes however results in a small capital stock which lowers returns to redistribution the median voter therefore wants to commit to a lower level of capital taxes she does so by setting a partial degree of decentralization in the constitution the equilibrium degree of decentralization balances the positive effect of tax competition on capital taxes with the loss in redistribution that results we show that the degree of decentralization is nonmonotonic in inequality increasing in the redistributive efficiency of public good provision and decreasing in capital productivity when public goods are heterogeneous in their capacity to transfer funds all voters agree that goods with high redistributive capacity should be decentralized

welfare improving user charges for publicly provided private goods it is argued that free provision of publicly provided goods or services is rarely optimal the argument is simple if optimal lump sum transfers are not available then the government will wish to use all handles which provide information about the distribution of welfare one such handle may be the usage of publicly provided goods and services as long as this is not uniform then it is a potentially valuable index for redistributive purposes this is illustrated using two models one in which usage of the publicly provided good is legislated by the government and another in which it is determined in part by the private costs of consuming public services

support for public provision of a private good with top up and opt out a controlled laboratory experiment abstract this paper presents the results of a revealed choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision top up or forego public provision opt out but in each case continue to pay income taxes our laboratory results confirm behavior is consistent with the predicted majority preferred tax rate under mixed financing with top up but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt out using non parametric regression analysis we explore the relationship between individuals top up and opt out decisions and both their income levels and the implemented tax rates

topping up or opting out the optimal design of public provision schemes there is extensive public provision of private goods in all developed countries the public provision scheme is often designed so that individuals can opt out but not top up supplement the publicly provided quantity quality using an optimal income ta

dynamically estimating the distributional impacts of u s climate policy with nems a case study of the climate protection act of 2013 we present a new method that enables users of the federal government s flagship energy policy model nems to dynamically estimate the direct energy expenditure impacts of climate policy across u s household incomes and census regions our approach combines nems output with detailed household expenditure data from the consumer expenditure survey improving on static methods that assess policy impacts by assuming household energy demand remains unchanged under emissions pricing scenarios to illustrate our method we evaluate a recent carbon fee and dividend proposal introduced in the u s senate the climate protection act of 2013 s 332 our analysis indicates this bill if enacted would have cut co2 emissions from energy by 17 below 2005 levels by 2020 at a gross cost of less than 0 5 of gdp while offering rebates sufficient to offset increased direct energy expenditures for typical households making less than 120 000 per year and average households in all regions of the united states

are the rich too rich to be expropriated economic power and the feasibility of constitutional limits to redistribution why is it that in democracies the poor do not expropriate the rich even though they outnumber them in this paper we analyze the commonly held belief that the rich escape expropriation because they are economically powerful we demonstrate that the economically powerful i e the above average income earners are indeed in a position to bribe the small segment of the voters with incomes between the median and the mean to resist the temptation of supporting confiscatory taxation this is true even if compensation payments in cash are politically unfeasible and therefore need to be made in terms of an evenly distributed private good and it may even be true if only pure public goods are available to swing the middle class

end use technology choice in the national energy modeling system nems an analysis of the residential and commercial building sectors abstract the national energy modeling system nems is arguably the most influential energy model in the united states the u s energy information administration uses nems to generate the federal government s annual long term forecast of national energy consumption and to evaluate prospective federal energy policies nems is considered such a standard tool that other models are calibrated to its forecasts in both government and academic practice as a result nems has a significant influence over expert opinions of plausible energy futures nems is a massively detailed model whose inner workings despite its prominence receive relatively scant critical attention this paper analyzes how nems projects energy demand in the residential and commercial sectors in particular we focus on the role of consumers preferences and financial constraints investigating how consumers choose appliances and other end use technologies we identify conceptual issues in the approach the model takes to the same question across both sectors running the model with a range of consumer preferences we estimate the extent to which this issue impacts projected consumption relative to the baseline model forecast for final energy demand in the year 2035 in the residential sector the impact ranges from a decrease of 0 73 quads 6 0 to an increase of 0 24 quads 2 0 in the commercial sector the impact ranges from a decrease of 1 0 quads 9 0 to an increase of 0 99 quads 9 0

can natural gas fired power generation break through the dilemma in china a system dynamics analysis abstract recently the share of natural gas in the generation of electricity has shown a dramatic increase in china however the domestic natural gas source natural gas price and unclear policy environment are the barriers lying on the development way of natural gas power generation this paper aims to evaluate development pattern and constraints in the development of china s natural gas power generation by system dynamics methodology the natural gas price for generation is predicted by market netback pricing method which sets up price linkage mechanism and bundles the natural gas price with alternative energy price the downturn of international oil market pushes natural gas price down in spite of the over demand domestic natural gas market the long term take or pay clauses provide a guarantee for adequate gas supply hence the natural gas price and source are no longer the case meanwhile the promotion policies including subsidy and emission trade scheme are analyzed as a result the natural gas power generation will witness explosive development with an average annual growth rate of about 10 by 2030 natural gas generation installed capacity will reach 235 7 gw

assistance to poor households when income is not observed targeted in kind and in cash transfers abstract policymakers frequently design self targeting programs or target poor areas to assist poor families when income is not observed self targeting schemes take advantage of differences in participation costs in assistance programs across households geographic targeting assumes that transfers are solely determined by the region of residence to receive the benefits households not initially present in the targeted areas must relocate away from their original place of residence and live with the poor which entails a cost that can also be interpreted as a participation cost in the assistance program the paper shows that a combination of in kind and in cash transfers tied to the consumption of a publicly provided private good targeted to the poor becomes very useful when non poor households have different participation costs by distinguishing users and non users of public facilities additional in cash transfers can be directed to the poor more effectively the paper demonstrates that the publicly provided good ends up being undersupplied and the distortion becomes less important as participation costs rise more importantly it shows that this kind of redistributive program dominates a pure in cash scheme

optimal redistribution with productive social services publicly provided private goods are conventionally considered consumer goods departing from this perspective we analyze the public provision of inputs that improve household productivity e g education and childcare in a two class economy with distorting taxation public provision is always welfare improving with respect to pure taxation given that the public input directly affects household productivity moreover the case for public provision strengthens as households heterogeneity in input demand fades out contrary to consolidated results in the literature the features of optimal provision schemes depend on the nature of publicly provided input namely if it substitutes household productive capacity or just helps households to exploit it

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

informal family insurance and the design of the welfare state we study unemployment benefit provision when the family also provides social insurance in the benchmark case more generous state transfers crowd out family risk sharing one for one an extension gives the state an advantage in enforcing transfers through taxes whereas families rely on self enforcement more generous state transfers lead to more than one for one reductions in intra family insurance so that total transfers to the unemployed fall as the state s generosity increases this does not imply that the optimal size of the welfare state is zero our results still hold when families are assumed to be better than the state at monitoring job search activities of unemployed

price equilibrium and willingness to pay in a vertically differentiated mixed duopoly in the framework of a vertically differentiated mixed duopoly with uncovered market and zero costs we study the existence of a price equilibrium when a welfare maximizing public firm producing low quality goods competes against a profit maximizing private firm producing high quality goods we show that a price equilibrium exists if the quality spectrum is wide enough vis a vis a measure of the convexity of the distribution of the consumers willingness to pay and that such equilibrium is unique if this sufficient condition is tightened logconcavity of the income distribution is inconsistent with the existence of equilibrium

two tier public provision comparing public systems abstract the paper considers a two tier institution in which government provides public services but individuals can opt out of public provision but not taxes funding for the public service is chosen endogenously by majority vote and we first provide necessary and sufficient conditions for a majority vote equilibrium in line with existing results the equilibrium tax rate usually falls below the one found in a one tier system opting out of public consumption is prohibited as the public system loses the political support of the rich who exit we prove that when the two tier system majority dominates a purely private system a majority in society always welcomes a transition from a one tier public system to a two tier system it is the only system that is stable in an evolutionary sense otherwise a majority consisting of the middle class may be in favor of staying in a one tier system prohibiting exit because of a slippery slope argument

the political economy of public health expenditure and wait times in a public private mixed health care system this paper investigates the determinants of public health expenditure in a public private mixed health care system where a longer wait time for public care is the major difference between public and private sectors voter preferences for health care vary according to their age and by income and public policy choices are part of a multi dimensional competitive political equilibrium we show how equilibrium public health expenditure and wait times depend on demographics and explain why they are independent of the distributions of income and political influence we also show that population aging may not always lead to more public health expenditure ce texte examine les determinants des depenses en sante publique dans un regime mixte public prive de soins de sante quand un temps d attente plus long est la difference majeure entre les secteurs public et prive les preferences des electeurs dans le monde de la sante varient selon l ge et le revenu et les choix de politique publique sont partie d un equilibre politique concurrentiel multidimensionnel on montre que les depenses en sante publique et les temps d attente en equilibre dependent de la demographie et que cela explique pourquoi elles sont independantes de la repartition des revenus et de l influence politique on montre aussi que le vieillissement de la population peut ne pas toujours entrainer des depenses en sante publique additionnelles

in search of welfare improving gifts gift giving is thought to decrease welfare recipients are sometimes stuck with gifts they would not have purchased because the giver does not perfectly know the recipient s preferences and in kind gifts cannot be costlessly refunded such gifts are welfare reducing compared to giving cash if in addition recipients possess full information as to which stores carry their desired goods and the ability to reach these stores costlessly we replace these two latter assumptions with the more realistic assumptions of uncertainty about the location of goods and search costs in contrast to existing economic models gifts in our model enhance expected welfare moreover gift giving cannot be replaced by a profit maximizing trader nor the introduction of nearby specialty stores carrying gift goods we use our model to explain a number of stylized facts about gift giving the organization of retail trade and in kind government transfers 2008 elsevier b v all rights reserved

on limiting the market for status signals abstract in many societies individuals care how others view them in their efforts to impress such individuals engage in consumption signals which attempt to establish higher levels of status than their true status type this leads to an inefficiency which offers the possibility of a pareto improving tax policy the impacts of tax policy and benefits on the signalling equilibrium are considered

downscaling heterogeneous household outcomes in dynamic cge models for energy economic analysis abstract downscaling methods for dynamic computable general equilibrium models are developed and analyzed the methods produce outcomes for a variety of different household types by downscaling the aggregate quantities from an economic growth model with a representative household this approach uses household survey data and long term population projections for different household types to compare the performance of the downscaling methods vs a general equilibrium model with multiple household groups under a variety of conditions including demographic change technological change and a carbon tax both recursive dynamic and forward looking downscaling methods produce results that approximate well a multiple household model run the recursive dynamic downscaling method is applied to an illustrative example estimating impacts of a carbon tax on aggregate co 2 emissions and the energy demand of different household groups for a middle of the road development scenario

a note on the meaning of cabinet durability cabinet durability is widely but not very plausibly regarded as an indicator of regime stability the alternative and more convincing interpretation is that it reflects executive dominance in executive legislative relationships

redistributive public employment abstract politicians may use disguised redistributive policies in order to circumvent opposition to explicit tax transfer schemes first we present a theoretical model that formalizes this hypothesis next we provide evidence consistent with the prediction of the model namely that in u s cities politicians use public employment as such a redistributive device we find that city employment is significantly higher in cities where income inequality and ethnic fragmentation are higher

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

public education spending and private substitution in urban china abstract this paper documents robust evidence that increases in public spending on basic education are associated with significant reductions in household private tutoring spending in urban china this reduction comes primarily from the top and bottom income households suggesting multi dimensional demands for private tutoring it concentrates on households with an only boy and is larger for middle school than primary school children increases in public education spending are associated with significant reduction in school tuition which is homogeneous across households of different income levels changes in household spending on textbooks in response to more public education spending are modest but statistically insignificant

are tax subsidies for private medical insurance self financing evidence from a microsimulation model this paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self financing in countries where public and private insurance coexist and the latter covers the same treatments as the former we construct a simulation routine based on a micro econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services as an application we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies using micro data from catalonia our results suggest that the subsidy is not self financing this result is driven by the fact that private medical insurance holders make concurrent use of public and private services and by the price inelasticity of the demand for private policies

assessing the option value of a publicly provided service the case of local transport the problem of identifying consumers valuation of local public transport services presents unique challenges this paper presents a theoretical and empirical study of this problem using a contingent valuation exercise illustrating two case studies in northern italy this serves as a basis for an econometric analysis aimed at highlighting the role of socioeconomic variables in the determination of the willingness to pay through public funds for the subsidization of public transport services findings suggest that social preferences for the provision of a public transport service cannot be directly deducted from observable market behavior furthermore the perception of mobility problems and the characteristics of social networks are likely to be much more important in determining the preferred supply level of public transport capacity than individual consumption levels

assigning resources to budget constrained agents this article studies different methods of assigning a good to budget constrained agents schemes that assign the good randomly and allow resale may outperform the competitive market in terms of utilitarian efficiency the socially optimal mechanism involves random assignment at a discount an in kind subsidy and a cash incentive to discourage low valuation individuals from claiming the good copyright oxford university press

to segregate or to integrate education politics and democracy how is the quality of public education affected by the presence of private schools for the rich theory and evidence suggest that the link depends crucially on the political system we develop a theory that integrates private education and fertility decisions with voting on public schooling expenditures we find that the presence of a large private education sector benefits public schools in a broad based democracy where politicians are responsive to low income families but crowds out public education spending in a society that is politically dominated by the rich the main predictions of the theory are consistent with state level data and micro data from the u s as well as cross country evidence from the programme for international student assessment study

subsidies as sorting devices abstract the divergence between tax payments and the cost of providing public services that arise from financing local public services provides an incentive for higher income communities to deter the entry of lower income households into their community here we demonstrate that higher income households to insure that low income households do not enter their community or reduce the number that do enter subsidize goods consumed by higher income households more than by lower income households this strategy will make the rich community less attractive to the poor deterring their entry to the community

tax subsidy and capacity decisions in a two tier health system with welfare redistributive objective service delay and patient choice endogenized in the queueing equilibrium through game theoretical approach subsidy policy does not always improve income redistribution the more the lower income patients is concerned the less unlikely is providing subsidy to private care under equal weights the larger the capacity of public sector the lower tax or higher subsidy to private care under unequal weights subsidize only when the capacity exceeds a threshold

private and public health insurance in the uk abstract this paper investigates the interaction between state health provision and private medical insurance in the uk regional data on private insurance and national health service waiting lists are used to assess whether higher levels of private insurance can affect performance of the public health sector

the potential impacts of climate change policy on freshwater use in thermoelectric power generation climate change policy involving a price on carbon would change the mix of power plants and the amount of water they withdraw and consume to generate electricity we analyze what these changes could entail for electricity generation in the united states under four climate policy scenarios that involve different costs for emitting co2 and different technology options for reducing emissions out to the year 2030 the potential impacts of the scenarios on the u s electric system are modeled using a modified version of the u s national energy modeling system and water use factors for thermoelectric power plants derived from electric utility data compiled by the u s energy information administration under all the climate policy scenarios freshwater withdrawals decline 2 14 relative to a business as usual bau scenario of no u s climate policy furthermore water use decreases as the price on co2 under the climate policies increases at relatively high carbon prices 50 tonne co2 however retrofitting coal plants to capture co2 increases freshwater consumption compared to bau in 2030 our analysis suggests that climate policies and a carbon price will reduce both electricity generation and freshwater withdrawals compared to bau unless a substantial number of coal plants are retrofitted to capture co2

collective choice and voluntary provision of public goods some public goods are provided entirely with private contributions others with a mixture of public and private funding and still others are entirely publicly funded in order to study this variation a model of dual provision is developed that endogenizes public and private funding households vote over an income tax that finances public supply of the good and on whether to permit private contributions while permitting private contributions may lead to a reduction in total provision a majority always favors permitting private contributions results are developed for small and large economies and the relevance of nonexcludability and noncongestion are investigated

international charity for the poor i introduction charities transfer billions of dollars annually to help people in other countries survive famines and other hardships due to natural and man made disasters such as droughts and civil wars in this article we address the difficulties charities have ensuring the survival of the life threatened poor overseas without exacerbating income inequality encouraging free riding or undermining recipient countries incentives to invest in the kinds of public works that could reduce their needs international charitable activities are subject to moral hazard principal agent and adverse selection problems due to information asymmetries thus too little charity can go to the truly needy and too much to countries that exaggerate their needs and or shirk indeed the empirical literature is rich with evidence of these effects for example lele and jain 1991 ruttan 1993 kanbur et al 1994 maren 1997 and the world bank 1998 document the disincentive effects of aid alesina and weder 1999 show that more aid goes to countries that are more corrupt cashel cordo and craig 1997 provide empirical evidence that the more aid a country receives the less it taxes cashel cordo and craig 1997 found statistically significant evidence of an inverse relationship between the amount of soft aid grants received and the amount of tax revenues subsequently collected by recipient governments in addition to this evidence of shirking they also found significant evidence of fungibility in which the recipient government spends released funds on other nontargeted budget items furthermore they show that donors appear to be complicit in this fungibility larger soft aid is associated with higher institutional spending such as for public administrators salaries inflows of hard aid loans targeted explicitly to economic development or public works projects show up in expanded spending on social services not expanded investment in public works alesina and weder 1999 found statistically significant evidence of a positive relationship between the share of aid in a government s budget and corruption they argued that high corruption may imply that domestically raised public resources are low and that a higher fraction of public resources are covered by foreign aid 14 also according to tornell and lane s 1999 voracity effect when power over redistributive mechanisms is highly concentrated aid encourages shirking by recipient governments thus in this article we model charities that expect recipients to reallocate revenues but not to reduce tax collections or spending on public works to formally analyze this international income transfer problem we apply the mechanism design techniques of laffont and tirole 1986 that have proven very useful in the design of domestic income maintenance programs there is a long tradition of optimal tax income maintenance program design literature about how aid encourages personal choices that are socially inefficient or self enriching see for example mirlees 1971 besley and coate 1992 or crane 1996 the key issue is that participants may reduce work effort or migrate to qualify for more benefits the impacts of information asymmetries on domestic program costs and implementation are also well known as in besley and coate 1991 1995 but with the exception of besley and coate 1998 the emphasis in that literature is on the design of domestic policies with respect to the incentives of individuals in this article we focus on charity with respect to the incentives of national governments our work on this problem is motivated by the desire to design programs that can address acute life threatening poverty defined as the inability to acquire the level of consumption goods necessary for life as in sen 1985 or ravaillon 1997 we assume that the charitable objective is that everyone has at least a minimum income

climate change policy s interactions with the tax system abstract this paper presents a range of insights from recent literature on how climate change policies and other environmental policies interact with the fiscal system it explores four issues associated with fiscal interactions first it examines how these interactions influence the prospects for a double dividend both an environmental improvement and a reduction in the costs of the tax system second it analyzes how the use of revenues from a carbon tax or from a cap and trade system involving auctioned emissions allowances influences these policies economic costs third it addresses the question whether carbon taxes or cap and trade programs represent more efficient sources of government revenue than other more traditional revenue sources such as income sales or payroll taxes finally it analyzes how fiscal interactions affect the choice between co 2 emissions pricing instruments carbon taxes and cap and trade and other climate policy instruments

the political economy of long term care we build a two dimensional political economy model to explain the provision and financing of long term care and income redistribution voting agents differ in need and income opening up two conflicts one sets families with disabled parents who are in favor of a public long term care program against the ones without such parents who oppose public financing the other sets the poor against the rich with the former preferring heavier income taxation than the latter we show that a structure induced equilibrium always exists and that it is unique if informal care is provided in equilibrium the equilibrium not only explains the negative association of income inequality and long term care financing but also allows predictions about how demographic change might impact long term care arrangements and expenses

economic dynamics and government stability in postwar italy in this paper i estimate a duration model of the italian government the main finding of the paper is that the downfall probability of an italian government depends on both political and economic factors in particular the higher the inflation rate and the higher the number of workhours lost in strikes both at the time a government forms and during its tenure in office the more likely it is for a government to collapse this result has important consequences for the validity of political theories of the business cycle