Wendner, Ronald (2011): Ramsey, Pigou, heterogenous agents, and non-atmospheric consumption externalities.
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This paper analyzes the effects of non-atmospheric consumption externalities on optimal commodity taxation and on the social cost and optimal levels of public good provision. A negative consumption externality, by lowering the social cost of public good provision, may require the second-best level of public good provision to exceed the first-best level. If those households who are most important for building up the consumption reference level respond the least to commodity taxation, heterogeneity may imply an equity-efficiency tradeoff. This tradeoff is present only if the consumption externality is of the non-atmospheric type.
|Item Type:||MPRA Paper|
|Original Title:||Ramsey, Pigou, heterogenous agents, and non-atmospheric consumption externalities|
|English Title:||Ramsey, Pigou, heterogenous agents, and non-atmospheric consumption externalities|
|Keywords:||consumption externality, optimal commodity taxation, Pigou, public good provision, Ramsey rule|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
D - Microeconomics > D6 - Welfare Economics > D62 - Externalities
H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods
|Depositing User:||Ron Wendner|
|Date Deposited:||25. Nov 2011 20:42|
|Last Modified:||11. Feb 2013 23:54|
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