Two Approaches to Determine Public Good Provision under Distortionary Taxation

Public good provision under dictatorship and democracy

The allocation of a government budget between a public good and transfers is modeled under different systems of government. The relatively even distribution of political power among groups in a democracy favors spending on nonexclusive public goods. The more concentrated pattern of political power in a dictatorship favors spending on transfers targeted to powerful groups. The hypothesis on publ...

A Simulation on the Public Good Provision Under Various Taxation Systems

Optimal income taxation and public good provision in a two-class economy

This paper combines the problem of optimal income taxation with the free-rider problem in public good provision. There are two groups of individuals with private information on their earning ability and their valuation of a public good. Adjustments of the transfer system are needed to discourage the more productive from exaggerating the desirability of public good provision. Similarly, the less...

Schumpeterian Growth with Productive Public Spending and Distortionary Taxation

The latest version of Schumpeterian growth theory eliminates the scale effect by positing a process of development of new product lines that fragments the aggregate market in submarkets whose size does not increase with population. A key feature of this process is the sterilization of the effect of the size of the aggregate market on firms’ incentives to invest in the growth of a given product ...

Evaluating Public Expenditures When Governments Must Rely on Distortionary Taxation

The evaluation of public expenditures is a central concern of development economics-and a concern highlighted by the increasingly stringent budget constraints in both developing and developed countries. This task has also become increasingly difficult as governments have moved their focus away from providing private, tradable, goods towards public goods that are provided either without charge, ...