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Public Good Provision

Author

Listed:
  • Chowdhury Mohammad Sakib Anwar
  • Alexander Matros
  • Sonali Sen Gupta

Abstract

We develop a model that links tax evasion, corruption, and public good provision. In our model, citizens pay or evade taxes into the public fund, which a corrupt governor redistributes. Each citizen forms expectations about the amount of public goods the governor should provide. After observing the actual level of public goods, a citizen punishes the governor if this level is below his expectations. We describe three types of equilibria: tax evasion, efficient public good provision, and symmetric mixed-strategy. We show that the highest expectations can lead to no free riding (tax evasion) and the efficient level of public good provision even with the corrupt governor and without punishment for tax evasion.

Suggested Citation

  • Chowdhury Mohammad Sakib Anwar & Alexander Matros & Sonali Sen Gupta, 2020. "Public Good Provision," Working Papers 300159332, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:300159332
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    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2020_012.pdf
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    References listed on IDEAS

    as
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    6. Gustavo J. Bobonis & Luis R. Cámara Fuertes & Rainer Schwabe, 2016. "Monitoring Corruptible Politicians," American Economic Review, American Economic Association, vol. 106(8), pages 2371-2405, August.
    7. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Banerjee, Ritwik & Boly, Amadou & Gillanders, Robert, 2022. "Anti-tax evasion, anti-corruption and public good provision: An experimental analysis of policy spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 179-194.

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    More about this item

    Keywords

    Tax evasion; Audits; Embezzlement; Corruption; Sanctions; Public goods;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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