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Subsidies versus public provision of private goods as instruments for redistribution

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  • BOADWAY, Robin
  • MARCHAND, Maurice
  • SATO, Motohiro

Abstract

The literature on the use of dierential commodity taxessubsidies and that on quan tity controls to supplement income taxation have developed separately from each other The purpose of this paper is to combine these two strands in the standard framework of optimal nonlinear income taxation We start from a simple model in which there are two types of households the government has access to both subsidy policy and public provision of a good substitutable with leisure and households can supplement the publicly provided good from the market We present conditions when optimal policy should involve a mix of these two instruments alongside income taxa tion or only one of them We also consider alternative settings including the extension to many types of households and the inability of households to supplement inkind transfers
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Suggested Citation

  • BOADWAY, Robin & MARCHAND, Maurice & SATO, Motohiro, 1998. "Subsidies versus public provision of private goods as instruments for redistribution," LIDAM Reprints CORE 1355, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1355
    DOI: 10.1111/1467-9442.00121
    Note: In : Scandinavian Journal of Economics, 100 (3), 545-564, 1998
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    References listed on IDEAS

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    1. Kevin Roberts, 1984. "The Theoretical Limits to Redistribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(2), pages 177-195.
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    9. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-377, May.
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    17. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
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    Cited by:

    1. Augustine A. Osagiede & Virtue U. Ekhosuehi, 2015. "A theoretical framework for determining the appropriate level of subsidy in an economy," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 25(2), pages 19-34.
    2. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    3. Robin Boadway, 1998. "Redistributing Smarter: Self-Selection, Targeting and Non-Conventional Policy Instruments," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 365-369, September.
    4. Neil Buckley & Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Stephanie Thomas & David Cameron, 2013. "Support for Public Provision with Top-Up and Opt-Out: A Controlled Laboratory Experiment," Department of Economics Working Papers 2013-15, McMaster University.
    5. DEL REY CANTELI, Elena, 1998. "The effects of economic integration on the provision of mandatory education as a redistributive policy," LIDAM Discussion Papers CORE 1998057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    7. Elena Del Rey, 2001. "Economic Integration and Public Provision of Education," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(2), pages 203-218, June.
    8. Sören Blomquist & Vidar Christiansen, 2003. "Is there a Case for Public Provision of Private Goods if Preferences are Heterogeneous? An Example with Day Care," CESifo Working Paper Series 938, CESifo.
    9. Yui Nakamura, 2014. "Cash Transfers for Poverty Alleviation Under Double Asymmetric Information Regarding Income and Productivity," Poverty & Public Policy, John Wiley & Sons, vol. 6(1), pages 71-79, March.
    10. Robin Boadway, 2011. "Viewpoint: Innovations in the theory and practice of redistribution policy," Canadian Journal of Economics, Canadian Economics Association, vol. 44(4), pages 1138-1183, November.
    11. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-383, June.
    12. 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.
    13. Anne Emblem, 2002. "Redistribution at the Hospital," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 367-378, August.
    14. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
    15. Blomquist, Sören & Christiansen, Vidar, 2004. "Welfare Enhancing Marginal Tax Rates: The Case of Publicly Provided Day Care," Arbetsrapport 2004:6, Institute for Futures Studies.
    16. Buckley, Neil & Cuff, Katherine & Hurley, Jeremiah & Mestelman, Stuart & Thomas, Stephanie & Cameron, David, 2015. "Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 177-196.
    17. Zanola, Roberto, 2000. "Public goods versus publicly provided private goods in a two-class economy," POLIS Working Papers 12, Institute of Public Policy and Public Choice - POLIS.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods

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