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Public Provision Of Private Goods In Developing Countries

Author

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  • PARKASH CHANDER

    (Jindal School of Government and Public Policy, Haryana 131001, India)

Abstract

In this paper, we characterize optimal redistributive taxes and subsidies on a discrete good which is available in different qualities. We assume that utility function of each consumer is such that his willingness-to-pay for quality increases with income. This separates the rich and the poor through the quality levels of the good actually purchased by them and allows the government to tax the rich and subsidize the poor. It is shown that the deadweight loss associated with the optimal policy may be zero. The notion of a consumer equilibrium introduced in the paper suggests a method for estimating the quality of a good as perceived by the consumers.

Suggested Citation

  • Parkash Chander, 2016. "Public Provision Of Private Goods In Developing Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(03), pages 1-13, June.
    • Handle: RePEc:wsi:serxxx:v:61:y:2016:i:03:n:s0217590816400166
    DOI: 10.1142/S0217590816400166
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    References listed on IDEAS

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