Adaptation, Taxation, and Public Goods

This paper shows how the first-best and second-best rules for optimal public good provision depend on the adaptation to private and public consumption. Adaptation in private consumption typically leads to over-provision relative to the Samuelson condition, while adaptation in public consumption works the other way around. The two sources of adaptation only cancel out in the extreme case of full adaptation.

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Year of publication:	2014-12-09
Authors:	Aronsson, Thomas ; Schöb, Ronnie
Institutions:	Institutionen för Nationalekonomi, Umeå Universitet
Subject:	Public goods \| adaptation \| habit-formation \| optimal taxation

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Extent:	application/pdf
Series:	Umeå Economic Studies.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series Umeå Economic Studies Number 902 6 pages
Classification:	D03 - Behavioral Economics; Underlying Principles ; D60 - Welfare Economics. General ; H21 - Efficiency; Optimal Taxation ; H41 - Public Goods
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011096139