International Tax and Public Finance

, Volume 7, Issue 1, pp 83–91 | Cite as

Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities

  • Ming Chung Chang


This paper revisits the question of whether the second-best level of public good provision is lower than the first-best level in a standard model of public good provision with identical consumers. The role played by the complementarities between the public good and the private commodities is clarified. Furthermore, it is shown that the second-best level is indeed below the first-best level if the Hicksian demands for the taxed commodities are independent of the level of public good provision.

public final good second best complementarity Ramsey taxation 


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© Kluwer Academic Publishers 2000

Authors and Affiliations

  • Ming Chung Chang

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