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Taxes or Fees? The Political Economy of Providing Excludable Public Goods

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  • KURTIS J. SWOPE
  • ECKHARD JANEBA

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.

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  • Kurtis J. Swope & Eckhard Janeba, 2005. "Taxes or Fees? The Political Economy of Providing Excludable Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 405-426, August.
    • Handle: RePEc:bla:jpbect:v:7:y:2005:i:3:p:405-426
    DOI: 10.1111/j.1467-9779.2005.00210.x
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    Cited by:

    1. George Economides & Apostolis Philippopoulos, 2024. "On the provision of excludable public goods: General taxes or user prices?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(3), pages 379-415, July.
    2. Kemnitz Alexander, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, De Gruyter, vol. 14(4), pages 432-448, December.
    3. Kira Boerner & Silke Uebelmesser, 2007. "Migration and the welfare state: The economic power of the non-voter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 93-111, February.
    4. Breyer, Friedrich & Sterba, Maj-Britt, 2024. "Are taxes or user-fees more popular among politicians? The case of childcare," Working Papers 24, University of Konstanz, Cluster of Excellence "The Politics of Inequality. Perceptions, Participation and Policies".
    5. Economides, George & Philippopoulos, Apostolis & Sakkas, Stelios, 2017. "Tuition fees: User prices and private incentives," European Journal of Political Economy, Elsevier, vol. 48(C), pages 91-103.
    6. Clemens Fuest & Martin Kolmar, 2013. "Endogenous free riding and the decentralized user-fee financing of spillover goods in a n-region economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 169-191, April.
    7. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo.
    8. Fuest, Clemens & Kolmar, Martin, 2007. "A theory of user-fee competition," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 497-509, April.

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