Abstract
When private goods are publicly provided, government authorities have to determine the distribution of in-kind benefits to recipients. In this paper, the public service provider is assumed to maximize utility defined over public service supply to different target groups, given a budget constraint. The production technology is target-group-specific and depends on the ability of each target group to produce service outcomes. Three benchmark allocation principles are identified: equality of treatment (ET), equality of outcome (EO), and equality of marginal cost (EMC). These principles can be considered to be consistent with special cases of a public preference model, which allows for compromises between different allocation principles. The condition of technological dominance implies that there is a clear-cut equity–productivity trade-off, whereas violations of this condition may reduce the significance of the trade-off.
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Langørgen, A. Targeting public services through the unequal treatment of unequals. Int Tax Public Finance 18, 193–213 (2011). https://doi.org/10.1007/s10797-010-9152-x
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DOI: https://doi.org/10.1007/s10797-010-9152-x
Keywords
- Treatment targeting
- Technological dominance
- Equity–productivity trade-off
- Publicly provided private goods
- In-kind transfers
- Ability types