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Earmarking: Bundling to Signal Quality

Author

Listed:
  • Amihai Glazer

    (Department of Economics, University of California-Irvine)

  • Stef Proost

    (Faculty of Economics and Applied Economics, Catholic University of Leuven)

Abstract

Earmarking is a form of bundling in which government adopts a tax policy while specifying the uses of the revenue. This paper explores how bundling can enhance efficiency: it can inform the public of the quality of a program proposed, or of the quality of the agency that will be responsible for designing and implementing the program.We show that policies that appear inefficient in isolation may become justified when bundled.

Suggested Citation

  • Amihai Glazer & Stef Proost, 2007. "Earmarking: Bundling to Signal Quality," Working Papers 060713, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:060713
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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2006-07/Glazer-13.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ergas, Henry, 2010. "New policies create a new politics: issues of institutional design in climate change policy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 1-22.
    2. Henry Ergas, 2010. "New policies create a new politics: issues of institutional design in climate change policy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 143-164, April.

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    More about this item

    Keywords

    Earmarking; Asymmetric information; Bureaucracy; Project evaluation;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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