Public Goods as a Screening Mechanism
نویسنده
چکیده
Court decisions in the past twenty years such as Southern Burlington County NAACP v. Mount Laurel Associated, as well recent legislation, have made exclusionary zoning laws based on race illegal and have limited, at least in many states, the legality of exclusionary zoning based on income. While there may be a number of reasons for the use of exclusionary or fiscal zoning, an economic rationale suggested by Hamilton (1975) is that fiscal zoning, in the form of minimum housing standards, can reduce or eliminate the divergence between tax payments and the cost of providing public services that arise from financing local public services through property taxes. In the absence of fiscal zoning an inefficient and possibly undefined equilibrium mix of residents among localities may exist. Fiscal zoning, by effectively requiring a minimum value of any house in the community, will lead to a minimum property tax payment for every household, thereby eliminating the possibility that the cost of public services received families with lower housing consumption and presumably income exceed the tax payments to them. Here we demonstrate that in the absence of zoning, higher income households, to ensure that low income households do not enter their community, can either increase their public services or subsidize goods consumed by higher income households but not lower income households. These strategies will make the rich community less attractive to the poor leading them to leave the community, thereby reducing the subsidy paid by the rich and increasing their utility. JEL Classification: H7: State and Local Government, Intergovernmental Issues; H4: PubliclyProvided Goods We thank Jan Brueckner and Dennis Epple as well as Seminar participants at the 1997 AREUEA Winter meetings. Manuscript was created in Word for Windows. Formatted for HP LaserJet 4P. 23 pages.
منابع مشابه
A truthful Screening Mechanism for Improving Information Asymmetry in Initial Public Offering Transactions
متن کامل
Equilibrium Participation in Public Goods Allocations
We consider a notion of voluntary participation for mechanism design in public goods economies in which mechanisms select public goods allocations and individuals then choose whether or not to submit their requested transfer to the central planner. The set of allocations that are robust to non-participation is shown to be sub-optimal in a wide variety of environments and may shrink to the endow...
متن کاملOptimal Investment in Knowledge Within a Firm Using a Market Mechanism
There has been an extensive research literature on auctions, but recent developments in technology have resulted in new interest in auction mechanisms as a practical way of allocating resources. This paper presents a new double-auction mechanism to handle resource allocation for public goods when complementarity exists. The mechanism is placed in the context of an organization’s internal knowle...
متن کاملThe Provision of Public Goods in an Economy with Ethnic Divisions∗
Many observers have argued that ethnic divisions make public goods more difficult to provide. This paper examines the provision of public goods in an economy with ethnic divisions. Households feel altruistically toward other households in their ethnic group. The amount of public goods in private contribution equilibrium is generally in decreasing in the amount of ethnic diversity. Public goods ...
متن کاملOptimal Income Taxation, Public-Goods Provision and Public-Sector Pricing: A Contribution to the Foundations of Public Economics
The paper develops an integrated model of optimal nonlinear income taxation, public-goods provision and pricing in a large economy. With asymmetric information about labour productivities and publicgoods preferences, the multidimensional mechanism design problem becomes tractable by requiring renegotiation proofness of the final allocation of private goods and admission tickets for excludable p...
متن کاملThe provision and pricing of excludable public goods: Ramsey-Boiteux Pricing versus bundling
This paper studies the relation between Bayesian mechanism design and the Ramsey-Boiteux approach to the provision and pricing of excludable public goods. For a large economy with private information about individual preferences, the two approaches are shown to be equivalent if and only if, in addition to incentive compatibility and participation constraints, the nal allocation of private-good...
متن کامل