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Income Distribution, Taxation, and the Private Provision of Public Goods

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  • Jun‐Ichi Itaya
  • David De Meza
  • Gareth D. Myles

Abstract

This article investigates the role of taxation when public goods are privately provided. Externalities between consumers via the public good are shown to cause kinks in social indifference curves. As a result, a government restricted to income taxation should engineer enough inequality to ensure there are some non‐contributors to the public good. Whether commodity taxation changes this conclusion depends on the extent to which consumers “see through” the government budget constraint. If they can, inequality should still be sought. When they cannot, in contrast to the case of an economy with only private goods, commodity taxation can be used in conjunction with income transfers to achieve the first‐best.

Suggested Citation

  • Jun‐Ichi Itaya & David De Meza & Gareth D. Myles, 2002. "Income Distribution, Taxation, and the Private Provision of Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 273-297, July.
    • Handle: RePEc:bla:jpbect:v:4:y:2002:i:3:p:273-297
    DOI: 10.1111/1467-9779.00098
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    Cited by:

    1. Nigar Hashimzade & Gareth D. Myles & Hana Yousefi, 2021. "Household tax evasion," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(5), pages 985-1011, October.
    2. Faias, Marta & Moreno, Emma & Wooders, Myrna, 2009. "A Strategic market game approach for the private provision of public goods," MPRA Paper 37777, University Library of Munich, Germany, revised 08 Mar 2012.
    3. Samwick, Andrew A. & Wang, Sophie, 2024. "Corporate social responsibility and voting over public goods," Global Finance Journal, Elsevier, vol. 60(C).
    4. Faias, Marta & Moreno-García, Emma & Wooders, Myrna, 2015. "On neutrality with multiple private and public goods," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 103-106.
    5. Tatsuyoshi Miyakoshi, 2008. "A Planner of Global Income Transfers: International Public Goods and Productivity Differentials," Discussion Papers in Economics and Business 08-38, Osaka University, Graduate School of Economics.
    6. Krzysztof Szczygielski, 2021. "Public provisions of professional services," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(2), pages 345-362, April.
    7. Schweinberger, Albert G. & Lahiri, Sajal, 2006. "On the provision of official and private foreign aid," Journal of Development Economics, Elsevier, vol. 80(1), pages 179-197, June.

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