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Taxes or Fees? The Political Economy of Providing Excludable Public Goods
Author(s) -
SWOPE KURTIS J.,
JANEBA ECKHARD
Publication year - 2005
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2005.00210.x
Subject(s) - excludability , public good , preference , economics , welfare , politics , public economics , microeconomics , public finance , majority rule , tax deferral , tax reform , market economy , macroeconomics , state income tax , law , political science , gross income
Abstract This paper provides a positive analysis of public provision of excludable public goods financed by uniform taxes or fees. Individuals differing in preferences decide, using majority rule, the provision level and financing instrument. The decisive voter has median preferences in a tax regime, but generally has above median preferences in a fee regime. Numerical solutions indicate that populations with uniform or left‐skewed distributions of preferences choose taxes, while a majority coalition of high‐ and low‐preference individuals prefer fees when preferences are sufficiently right skewed. Public good provision and welfare under fees exceeds that under taxes in the latter case.