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Public goods versus publicly provided private goods in a two-class economy

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  • Zanola, Roberto

Abstract

The two-type model of non-linear income taxation with asymmetric information on individual ability levels is extended to discuss welfare effects of two policy instruments: a pure public good and a publicly provided private good. This latter is interpreted as health care. Three different cases are analysed:\ when each policy instrument is used in turn and when they are jointly used. The publicly provided private good is proved to be welfare enhancing when it is used as the only policy instrument. By contrast, in the mixed case, the publicly provided private good acts as a lump-sum transfer to all individuals.

Suggested Citation

  • 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.
    • Handle: RePEc:uca:ucapdv:12
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    More about this item

    Keywords

    Health Care; Optimal Taxation; Welfare; Mixed Goods;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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