Social Choice and Welfare

, Volume 34, Issue 3, pp 363–369 | Cite as

A note on the optimal level of public inputs

Original Paper

Abstract

This paper analyses whether the first-best level of public inputs exceeds the second-best level. On the basis of a simple model, we argue that the level of productivity-enhancing public expenditures is always higher than the level of public inputs provided with distortionary taxation.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Chang M (2000) Rules and levels in the provision of public goods: the role of complementarities between public good and taxed commodities. Int Tax Public Finance 7: 83–91CrossRefGoogle Scholar
  2. Feehan JP, Matsumoto M (2002) Distortionary taxation and optimal public spending on productive activities. Econ Inq 40(1): 60–68CrossRefGoogle Scholar
  3. Gaube T (2000) When do distortionary taxes reduce the optimal supply of public goods?. J Public Econ 76: 151–180CrossRefGoogle Scholar
  4. Gaube T (2005) Financing public goods with income taxation: provision rules vs. provision level. Int Tax Public Finance 12: 319–334CrossRefGoogle Scholar
  5. Gaube T (2007) A note on the link between public expenditures and distortionary taxation. Econ Bull 8(9): 1–10Google Scholar
  6. Gronberg T, Liu L (2001) The second-best level of a public good: an approach based on the marginal excess burden. J Public Econ Theory 3(4): 431–451CrossRefGoogle Scholar
  7. Konishi H (1993) A note on public good provision and commodity taxes. Econ Stud Q 44(2): 178–184Google Scholar
  8. Pigou AC (1947) A study in public finance, 3rd edn. Macmillan, LondonGoogle Scholar
  9. Wilson JD (1991) Optimal public good provision with limited lump-sum taxation. Am Econ Rev 81(1): 153–166Google Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Department of EconomicsUniversity Pablo OlavideSevilleSpain

Personalised recommendations