Taxes or Fees? The Political Economy of Providing Excludable Public Goods

34 Pages Posted: 22 Aug 2001

See all articles by Kurtis J. Swope

Kurtis J. Swope

United States Naval Academy

Eckhard Janeba

University of Mannheim - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: August 2001

Abstract

This paper provides a positive analysis of public provision of excludable public goods financed by uniform taxes or fees. Individuals differing in preferences decide using majority-rule the provision level and financing instrument. The median preference individual is the decisive voter in a tax regime, while an individual with preferences above the median generally determines the fee in a fee regime. Numerical solutions indicate that populations with uniform or left-skewed distributions of preferences choose taxes, while a majority coalition of high and low preference individuals prefer fees when preferences are sufficiently right-skewed. Public good provision under fees exceeds that under taxes in the latter case.

Keywords: Excludable Public Goods, Public Provision, Voting

JEL Classification: P26, H41

Suggested Citation

Swope, Kurtis J. and Janeba, Eckhard, Taxes or Fees? The Political Economy of Providing Excludable Public Goods (August 2001). CESifo Working Paper No. 542. Available at SSRN: https://ssrn.com/abstract=280875 or http://dx.doi.org/10.2139/ssrn.280875

Kurtis J. Swope (Contact Author)

United States Naval Academy ( email )

121 Blake Road
Annapolis, MD 21402-5000
United States

Eckhard Janeba

University of Mannheim - Department of Economics ( email )

L7, 3-5
D-68131 Mannheim
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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