Social Welfare and Collective Goods Coercion in Public Economics
Posted: 28 Mar 2007
Date Written: Janury 24, 2007
This paper develops an expanded framework for social planning in which coercion stemming from the provision of public goods is explicitly acknowledged. Key issues concern the precise definition of coercion, its difference from redistribution, and its incorporation into social welfare optimization. The paper examines the implications for optimal policy, showing how the Samuelson condition, rules for optimal linear income taxation and commodity taxation, and for the marginal cost of public funds must be modified. In addition, the trade-off between social welfare and coercion is mapped under specific conditions and the implications of this trade-off for normative policy choice are considered.
Keywords: Coercion, optimal linear income taxation, optimal commodity taxation, marginal cost of public funds, public goods, collective choice
JEL Classification: D70, H10, H20, H21
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