A Unified Approach to the Revelation of Public Goods Preferences and to Optimal Income Taxation

39 Pages Posted: 26 Nov 2008

See all articles by Felix J. Bierbrauer

Felix J. Bierbrauer

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Date Written: October 30, 2008

Abstract

We study a large economy model in which individuals have private information about their productive abilities and their preferences for public goods. A mechanism design approach is used to characterize implementable tax and expenditure policies. A robustness requirement in the sense of Bergemann and Morris (2005) yields individual incentive compatibility constraints that are equivalent to those in the theory of optimal income taxation in the tradition of Mirrlees (1971). Adding a requirement of coalition-proofness yields a set of collective incentive conditions which are akin those in the literature on public goods provision under private information on preferences, in the tradition of Clarke (1971) and Groves (1973).

Keywords: Optimal Taxation, Public goods provision, Revelation of Preferences, Robust Mechanism Design

JEL Classification: D71, D82, H21, H41

Suggested Citation

Bierbrauer, Felix J., A Unified Approach to the Revelation of Public Goods Preferences and to Optimal Income Taxation (October 30, 2008). MPI Collective Goods Preprint, No. 2008/39. Available at SSRN: https://ssrn.com/abstract=1307618 or http://dx.doi.org/10.2139/ssrn.1307618

Felix J. Bierbrauer (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

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