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Redistribution and provision of public goods in an economic federation
Umeå University, Faculty of Social Sciences, Department of Economics.
Department of Economics, Uppsala University.
2008 (English)In: Journal of Public Economic Theory, ISSN 1097-3923, E-ISSN 1467-9779, Vol. 10, no 1, 125-143 p.Article in journal (Refereed) Published
Abstract [en]

This paper concerns redistribution and public good provision in an economic federation with two levels of government: a local government in each locality and a (first mover) central government. Each locality is characterized by two ability-types, and the ability-distribution differs across localities. The central government redistributes via a nonlinear income tax and a lump-sum transfer to each local government, while the local governments use proportional income taxes and provide local public goods. We show how the redistributive role of taxation is combined with a corrective role, and how the central government can implement the second best resource allocation.

Place, publisher, year, edition, pages
John Wiley & Sons, 2008. Vol. 10, no 1, 125-143 p.
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URN: urn:nbn:se:umu:diva-6726DOI: 10.1111/j.1467-9779.2008.00354.xOAI: diva2:146396
Available from: 2007-12-17 Created: 2007-12-17 Last updated: 2012-08-28Bibliographically approved

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Aronsson, Thomas
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