It is an important difference in different measures of the marginal cost of public funds whether to take into account the "revenue effect" emphasized by Atkinson and Stern (1974). This note tries to reconcile two competing measures from a general viewpoint. We demonstrate that the revenue effect...

Assume that the private goods and the public good are weakly separable, the private goods are gross complements, and the private utility function is a homogeneous of degree one function with constant elasticity of substitution. We demonstrate that, under commodity taxation, the social marginal...

<title>Abstract</title> In China, some scholars have argued that luxury spending is socially beneficial to equalise wealth, under the assumption that the total endowment of resources is a fixed amount. This argument is not only consistent with Confucianism but also might point to another lesser known side of...

This paper concerns an industry with two complementary goods. It is demonstrated that if a good is active in Cournot equilibrium, then it is active in either one of the socially optimal solution and the monopoly solution; but, the converse is not true. When demands are linear, a good is active...