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Redistribution and provision of public goods in an economic federation
Department of Economics, Umeå University.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2008 (English)In: Journal of Public Economic Theory, ISSN 1097-3923, E-ISSN 1467-9779, Vol. 10, no 1, 125-143 p.Article in journal (Refereed) Published
Abstract [en]

This paper concerns redistribution and public good provision in an economic federation with two levels of government:a local government in each locality and a (first mover) central government. Each locality is characterized by two ability-types, and the ability-distribution differs across localities. The central government redistributes via a nonlinear income tax and a lump-sum transfer to each local government, while the local governments use proportional income taxes and provide local public goods.We show how the redistributive role of taxation is combined with a corrective role, and how the central government can implement the second best resource allocation.

Place, publisher, year, edition, pages
2008. Vol. 10, no 1, 125-143 p.
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URN: urn:nbn:se:uu:diva-108548DOI: 10.1111/j.1467-9779.2008.00354.xISI: 000252588300006OAI: oai:DiVA.org:uu-108548DiVA: diva2:236272
Available from: 2009-09-22 Created: 2009-09-22 Last updated: 2011-01-12Bibliographically approved

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