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Public goods versus publicly
provided private goods in a two-class economy*
by
Roberto ZanolaDepartment of Public Policy and Public Choice - Polis
Corso Borsalino, 50 – 15100 Alessandria - ItalyE-mail: [email protected]
ABSTRACT: The two-type model of non-linear income taxation with asymmetric information on individualability levels is extended to discuss welfare effects of two policy instruments: a pure public good and apublicly provided private good. This latter is interpreted as health care. Three different cases are analysed:\when each policy instrument is used in turn and when they are jointly used. The publicly provided privategood is proved to be welfare enhancing when it is used as the only policy instrument. By contrast, in the mixedcase, the publicly provided private good acts as a lump-sum transfer to all individuals.
JEL: H41, H51, I18.Key Words: Health Care; Optimal Taxation; Welfare; Mixed Goods
* This paper has benefited from helpful discussions with R.Aaberge, G.Brosio, M.Ferrero, C.Marchese, A.M.Jones and U.Panizza. Theusual disclaimer applies.
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1 Introduction
A nextensiveeconomicliteratureexistsontheprovisionofpublicgoodsby
theprivatesector[B ergstrom etA l.., 19 86;A ndreoni, 19 8 8]. B ycontrast, the
reversequestionofthepublicprovisionofprivategoodswas oddlyneglected
untilrecentyears, withtheexceptionofsomepioneeringcontributions.
Two di¤erentapproaches have been developed to address this question
[Boadwayand M archand, 19 9 5;B lomquistandChristiansen, 19 9 9 ]. T he…rst
is representedbythepublicchoicemodels, whichexaminetheinteractionbe-
tweenvoterdemandandthesupplyofpubliclyprovidedprivategoods. Inthis
approach, thequantityofpubliclyprovidedprivategoodsisdeterminedbythe
medianvoter’schoiceand, consequently, taxes aresetatthelevelrequiredto
…nanceit. Inordertobere-elected, thegovernmentis forcedtomaximisethe
medianvoter’sutilityfunction, sinceherepresents thedecisivevoter[M eltzer
andR ichard, 19 81;U sher, 19 7 7 ;W ilsonandKatz, 19 83;Pauly, 19 9 2;G ouveia,
19 9 6, 19 9 7 ;EppleandR omano, 19 9 6a, 19 9 6b;G lomm andR avikumar, 19 9 8].
T hesecondapproach is representedbynormativemodels, whichfocus on
thee¢ciencyenhancingroleofpubliclyprovidedprivategoods. A ccordingto
this literature, inthepresenceofdistortionarytaxes thereis astrongcasefor
thedesiderabilityofin-kindtransfers insteadofmonetarytransfers1.
T hebasicideaofthisliteratureisthatpubliclyprovidedgoodscanbeused
as adevicetoselectincomegroups, sincethegovernmentcannotobservethe
individuals’ incomes. Ifrich individuals prefertoconsumehigherquality(or
quantity) ofagoodsuchashealthcare, thegovernmentcanredistributefrom
high-incometolow-incomeindividualsbyprovidingthisgoodpublicly. Publicly
providedprivategoodsofrelativelylowqualityallowthelow-incomeindividuals1Forasurveyoftheliterature, seeB alestrino(19 9 9 ).
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toconsumethesegoodsforfree, whilehigherincomeindividualswillconsume
them intheprivatemarket. Boadwayand M archand (19 9 5), B lomquistand
Christiansen(19 9 5, 19 9 8a, 19 9 8b), CremerandG ahvari (19 9 7 ), andBoadway,
M archandand Sato(19 9 8) studypublicprovisionofprivategoods in atwo-
typemodelwith self-selection constraints. M orerecently, T hum and T hum
(19 9 9 )examinehowredistributionthroughpublicprovisionofprivategoodscan
beextendedtothecaseofrepeatedinteractions betweenthegovernmentand
transferrecipients. H owever, allthesemodels donotincludepublicprovision
ofapublicgood. B y contrast, BoadwayandKeen (19 9 3) give an excellent
accountofpublicprovisionofapublicgoodinatwo-typesmodelwithoptimal
non-linearincometax, buttheirmodelis still incomplete since itdoes not
includepublicprovisionofaprivategood.
T hepurposeofthispaperistogeneralisethislatterapproach, byinvestigat-
inghowthesimultaneousprovisionofbothapublicgoodandapubliclypro-
videdprivategoodcanimprovethee¢ciencyofredistributionwithinamodelof
optimalnon-linearincometaxationwithasymmetricinformationonindividual
abilitylevels.
T heremainderofthepaperisorganisedasfollows. Section2 describesthe
basicmodel. Section3analyseswelfaree¤ects ofpublicgoodprovisionwhen
the levelofpublicly provided privategood is given. Section 4 analyses the
oppositecaseinwhichthelevelofpublicgoodis given. Section5 focuses on
themixedscheme, wherebothpolicyinstruments areused. Someconclusions
aredrawninSection6.
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2 Thebasicmodel
Consideraneconomyconsistingoftwotypes ofindividuals, characterisedby
twodi¤erentindexes, w1 andw2;withw2 > w1 . T he variablewi maybe
thoughtofas thewagerateoras ability, buttheanalysis is generalisablein
thisrespect. Informationaboutabilityandsuppliedhoursoflabourisprivate
informationnotavailabletothegovernment, whichcanonlyobservetotalindi-
vidualincome. Inthis setting, thegovernmentcannotimposelump-sum taxes
conditionalonability. Insteadaredistributionschememustbedesignedsubject
toan informationconstraintinordertopreventhigh-abilityindividuals from
mimickinglow-abilityindividuals. T hisoccurswhenthemoreableindividuals
masqueradeas low-abilityones byearningthesameincome. Inwhatfollows,
I willfocus onthe‘normal’caseinwhichthegovernmentredistributiongoes
from thehigh-abilitytothelow-abilityindividuals.
Intheeconomytherearefourcommodities: aprivategood, x;timespent
onwork, l;apurepublicgood, g;andamixedgood2 , z, whichisinterpretedas
healthcare. T hegovernmentprovidesthesamelevelofthepublicgood, g, toall
individuals, eveniftheymayvalueitdi¤erently. Italsoprovidessomeamount
ofhealthcare, h;uniformlytoallindividuals. Individualsmaysupplementit
bypurchasinghealthcareintheprivatemarket, s, buttheyarenotallowedto
tradesomeofthepubliclyprovidedquantity3, sothatz=h+ s;withs¸0 :I
assumex;g;z;andleisuretobenormalgoods. Furthermore, themixedgood
andleisureareassumedtobesubstitutes4, sinceanincreaseinleisureimplies2 A nearlyde…nitionofmixedgood is givenbyStiglitz (19 7 4): ‘...is aprivategood(agood
forwhichthereis asubstantialmarginalcostofanadditionalpersonconsumingit) which is
provided inequalquantities toallindividuals (withinagivenclass)’.3T his assumption is necessarytomakean in-kindtransferdistinguishablefrom atransfer
incash.4T his assumption is equivalenttoassumingthatthemarginalvaluationof z is increasing
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adecreaseinthedemandforz, takingconsumerpricesanddisposableincome
asgiven[BoadwayandM archand, 19 9 5;BoadwayetA l.., 19 9 8].
T ypei’sbefore-taxincomeisYi=wili:Eachtype-i individualhasthesame
quasi-concaveandtwicedi¤erentiableutilityfunction:
U i(x;l;g;z)=U i(x;Ywi;g;zi) (1)
with@U i=@x> 0 ;@U i=@l< 0 ;@U i=@g> 0 ;and@U i=@z> 0 .
Each individualmaximises utilitybychoosingx;Y;and s subjecttothe
budgetconstraintY ¡T (Y )=x+ phs;whereT (Y )isanon-lineartax-function5
andph is thepriceofhealthcare, whilethepriceofxisnormalisedtoone.
FollowingChristiansen(19 84), I assumethattheindividual’s problem can
beanalysedasatwo-stageprocess. Inthe…rststage, hedecideshis supplyof
labour;inthesecond stage, heallocates his after-tax incomebetweenxand
s, conditionalonthebefore-taxincomewhichhasbeenearnedbysupplyingl.
Solvingbackward, atstagetwolabouristreatedas …xed. L etB i=Yi¡Ti be
theindividuali’s after-taxincome;bysubstitutingxi = B i¡phsi inequation
(1)andmaximisingwithrespecttosi, theindividual’sproblemmaybewritten
as:
M ax(si 0̧ )
U i(B i¡phsi;Yi;g;si + h) (2)
in labour, @M R Sixz =@li> 0 ;whereM R Sixz is themarginalrateofsubstitutionofx for z in
utilityfunction [B lomqvistandChristiansen, 19 9 8].5T hechoiceofnon lineartaxation is madetomaketheself-selectionconstrainte¤ective.
Infact, inthecaseoflinearincometaxation, ane¢cientredistribution is precluded[W ilson,
19 9 1].
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T he…rst-orderconditionsyieldtheconditionaldemandfunction, si(ph;g;h;Yi;B i),
whichexpressesthedemandforgoodsconditionaluponthevalueofli.
A usefulpropertyoftheconditionaldemandfunctionsoccursforsi > 0 ;as
shown in B oadwayetA l.. (19 9 8): Supposeh is increasedwhen si > 0 . T he
changeinthedemandforzi maybebrokendownintotwoseparatee¤ects: an
incomee¤ectandasubstitutione¤ect. T heincomee¤ectmakestheindividual’s
overalldemandforzi increase;bycontrast, sincehandsi areassumedtobe
perfectsubstitutes, thesubstitutione¤ectreducesthedemandforsi, sothat:
@si@h
=phµ@si@B i
¶¡1 (3)
Substitutingtheconditionaldemand function forsi intotheutilityfunc-
tion U i(:)yieldstheindirectutilityfunction, whichrepresentstypei’sutility
functionwhenhis before- andafter-taxincomeis spentoptimally:
i(ph;g;h;Yi;B i)=U i [B i¡phsi(ph;g;h;Yi;B i);Yi;g;h+ si(ph;g;h;Yi;B i)]
(4)
T his can berepresented geometrically byan indi¤erencemap in (B i;Yi)
space, characterisedbythesingle-crossingproperty, inwhichlow-abilityindif-
ferencecurvesaresteeperthancurvesofhigh-abilityindividuals.
B yapplyingtheenvelopetheorem, from (4) itfollows:
iph=¡U ixsi; ig=U i
g; ih=U iz¡phU i
x; iYi =U il
wi; iB i =U i
x:
(5)
wherepartialderivativesareexpressedbyappropriatesubscripts.
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A tthe …rststageofthe individual’s maximisation, he has todecidethe
supplyofhoursoflabour, or, whichisequivalent, thecombinationofbefore- and
after-taxincome, tomaximise(4). Inthisrespect, thegovernment’schoiceofa
non-lineartaxschedulemaybeinterpretedastheo¤eringofthis combination
ofbefore- andafter-taxincometoindividuals.
Inwhatfollows, I focusonsecond-bestPareto-e¢cientsolutions, takingthe
objectofthegovernmenttobethemaximisationofasocialwelfarefunction,
de…nedastheweightedsum ofutilitiesofthetwoabilitytypes, subjecttothe
self-selectionconstraintforhigh-abilityindividualsandthegovernment’sbudget
constraint. I considerthecase inwhich redistribution is from high- tolow-
abilityindividualstotheextentthattheself-selectionconstraintisbinding. In
ordertopreventhigh-abilityindividualsfrommimickingthebefore-taxincome
oflow-abilityindividuals, aself-selectionconstrainthas been introduced: the
utilityoftype-twoindividualsfrombeinghonestmustbehigherthantheutility
associatedwithmimicking. Thegovernment’smaximisationproblem isde…ned
as:
M ax 1(ph;g;h;Y 1 ;B 1)+ ® 2(ph;g;h;Y2;B 2) (6)
subjectto:
2(ph;g;h;Y2;B 2) ¸ m2(ph;g;h;Y 1 ;B 1) (7 )
n1 [Y 1 ¡B 1]+ n2 [Y2¡B 2] ¸ phh(n1 + n2)+ pgg (8)
where® representstheweightgiventothehigh-levelindividual’sutility;ni
isthenumberoftypei-individuals;andpg isthepriceofthepurepublicgood,
which is assumedtobe…xedbecauseofthelinearityofthetechnology. The
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superscript‘m2’totherespectiveutilityfunctionsidenti…estype-twomimicking
individuals.
T hreepolicyinstrumentsareavailabletothegovernment: anon-linearin-
cometax, apurepublicgoodandapubliclyprovidedprivategood. Consider
…rsttheoptimalsecondbestnon-lineartaxation, whichisassumedtobealways
inplacehereafterwards. T he L agrangianforthegovernment’s maximisation
problem maybewrittenas:
L = 1 (ph;g;h;Y 1 ;B 1)+ ® 2(ph;g;h;Y2;B 2)+
¯[ 2(ph;g;h;Y2;B 2)¡m2(ph;g;h;Y 1 ;B 1)]+
± [n1 (Y 1 ¡B 1 ¡phh)+ n2 (Y2¡B 2¡phh)¡pgg]
(9 )
where¯ and± aretheL agrangianmultipliersrespectivelyassociatedtothe
self-selectionconstraintandthegovernment’sbudgetconstraint. D i¤erentiating
(9 )withrespecttoB 1 ;y1 ;B 2;y2;yieldsthefollowingFO Cs:
@L@B 1
= U 1x¡¯U m2
x ¡±n1 =0 (10)
@L@y1
= U 1y ¡¯U m2
y ¡±n1 =0 (11)
@L@B 2
= (® + ¯)U 2x¡±n2 =0 (12)
@L@y2
= (® + ¯)U 2y ¡±n2 =0 (13)
T heserepresentthestandardconditionsforoptimaltaxationintheabsence
ofpublicgoods [Stiglitz, 19 82; BoadwayandKeen, 19 9 3]. Inparticular, fol-
lowingStiglitz (19 82), dividing(13) by(12), itfollows thatthemarginaltax
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ratefacedbythemoreableindividualis zeroanddividing(11) by(10) that
themarginaltaxratefacedbythelessableindividualwillbepositive6. H ence,
themaximum levelofwelfareattainablethroughanon-linearincometaxsys-
tem, takinggandhasgiven, is constrainedbyself-selection. Inthis respect,
theuseofquantitycontrols canrelaxtheself-selectionconstraintandallows
thegovernmenttoimprovethee¢ciencyofredistributionasshowninthenext
sections.
6SeeStiglitz (19 8 2) foramoregeneralanalysis ofconditions (10)-(13).
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3 Thewelfaree¤ectofthepurepublicgood
Considerthecase inwhich theamountofpublicly provided privategood is
given. D e…neW (g;h)themaximum valuefunctionforthegovernment’sopti-
malincometaxproblem. T hisrepresentsthevalueofsocialwelfareforagiven
amountofgandh. B yapplyingtheenvelopetheorem andusing…rst-order
conditions, we…ndthefollowingpropertyofW (g;h):
@W@g
=U 1g+ (® + ¯)U 2
g¡¯U m2g ¡±pg (14)
Fromwhichitfollows:
Proposition1 Foranyvalueofh,
@W@g
8>>><>>>:
>
=
<
9>>>=>>>;0 iff
Pi M R S igx
8>>><>>>:
>
=
<
9>>>=>>>;
hpg+
³¯Um2
x±
´¡M R Sm2
gx ¡M R S 1gx¢i
Proof. FollowingB oadwayandKeen(19 9 3), addingandsubtracting¯U m2x
³U 1gU 1x
´
to(14), andusing(10) and(12), itfollows:
@W@g
=X
i
M R S igx¡pg¡µ¯U m2
x
±
¶¡M R Sm2gx ¡M R S 1gx
¢(15)
FromwhichitiseasytocheckforProposition1
TogetfurtherintuitiononProposition1, considerthecaseinwhich, fora
givenvalueofh, theoptimalnon-linearincometaxandpublicgoodpolicyare
bothinplace. T hismeansassuminggasacontrolvariableinthegovernment’s
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optimisationproblem(9 ), sothattheoptimalityconditionongimpliesequation
(15) equaltozero. W henthisoccurs, theSamuelsonrule- accordingtowhich
thesum ofthemarginalrateofsubstitutionoverallindividualsmustbeequal
tothemarginalrateoftransformation - is violatedwheneverthemimicker’s
marginalevaluationofthepublicgoodisgreaterorlowerthanthelow-ability’s
marginalevaluation. Inparticular, atsecondbestParetoe¢ciencyinthelevel
ofpublicgoodprovision, constrainedbyabindingself-selectionconstrainton
thehigh-abilityindividuals, anover-provision/under-provisionofpublicgoods
occurs ifthesum ofmarginalrates ofsubstitutionofgforx is lower/higher
thanthemarginalcost7 .
Consider…rstthecaseinwhich M R S 1gx> M R Sm2gx , thatis, atsecondbest
optimumthereisanover-productionofg(withrespecttothe…rstbestsolution).
FollowingBoadwayandKeen(19 9 3), startingatP
i M R S igx=pg, supposeto
increasegincrementally, and, simultaneously, toincreaseeachindividual’stax
liabilitybyhismarginalrateofsubstitutionofgforx:Sincethemimickerand
low-ability individuals facethe samebudgetconstraintand since M R S 1gx >
M R Sm2gx;themimickeris crowdedoutatalowervalueofgthanthevalueat
which low-ability individuals arecrowdedout. Furthermore, since B 2 > B 1
andY2 > Y 1 , andsince @g@B i > 0 and @g
@Yi > 0 ;themimickerisalsocrowdedout
beforehonesthigh-ability individuals. T he self-selection constrainton high-
ability individuals turns outtoberelaxed, sothatpublicgood provision is
welfareenhancing.
A similarargumentappliesforthecaseinwhich M R S 1gx< M R Sm2gx:W hen
this occurs, startingatP
i M R S igx = pg supposetoreduceg incrementally
and, atthesametime, tomodifythetaxstructure in suchawaythateach7 A s in B oadway and Keen (19 9 3), the concept ofover- and under-provision is merely
‘...shorthandforacentralcharacteristicofthesecond-bestoptimum’.
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individual’staxliabilitydecreasesbyhismarginalrateofsubstitutionofgfor
x. L ikewise, themimickeris crowdedoutbeforeeitherlow-abilityandhigh-
abilityindividuals.
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4 The welfare e¤ectofthe publicly provided
privategood
Considernowthecaseinwhichtheamountofpublicgoodisgiven. Byapplying
theenvelopetheoremandusing…rst-orderconditions, aftersomemanipulations
wegetthefollowingpropertyofW (g;h):
@W@h
=¡U 1z¡phU 1
x¢+ (® + ¯)(U 2
z¡phU 2x)¡¯ (U m2
z ¡phU m2x )+
¡±ph·1 ¡ph
µ@si@B i
¶+@si@h
¸(16)
whereh1 ¡ph
³@si@B i
´+ @si
@h
iis thecompensatede¤ecton si:From (16) it
follows:
Proposition2Foranyvalueofg, ifzisasubstituteforleisure, anincrease
inthelevelofthepubliclyprovidedgoodiswelfareenhancing.
Proof. B ysubstituting(10) and(12) into(16)andrearranging, wehave:
@W@h
= ±·n1
¡M R S 1zx¡ph
¢+ n2
¡M R S 2zx¡ph
¢+¯±U m2x
¡M R S 1zx¡M R Sm2
zx¢̧¡
¡±ph·1 ¡ph
µ@si@B i
¶+@si@h
¸(17 )
G iven1 ¡ph³@si@B i
´+ @si
@h =0 forsi > 0 ;byapplyingtheenvelopetheorem,
itfollowsthat@W@h > 0 i¤ :
¯±U m2x
¡M R S 1zx¡M R Sm2zx
¢> 0 (18)
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Sincez is assumedtobeasubstituteforleisure, ifhigh-abilityindividuals
mimicklow-abilityindividualstheyconsumemoreleisurethanlow-abilityindi-
viduals, andconsequentlyless publiclyprovidedprivategood, sothatitmust
bethecasethatM R S 1zx> M R Sm22 :H ence, sinceU m2x > 0 ;followsProposition
2
T his resultstates thatiftheassumptiononthesubstituabilitybetweenz
andleisureholds, thenadditional(withrespectto…rst-bestoptimum) public
provisionofaprivategoodcanrelaxthehigh-abilityself-selectionconstraint.
A nalogouslytotheprevious section, hereI onlyconsiderthecaseinwhicha
singlepolicyinstrumentisused. Insodoing, thepurepublicgoodisassumedto
begiven, atleastequaltozero. T hisassumptionisrelaxedinthenextsection,
wherethemixedschemeisanalysed.
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5 Thewelfaree¤ectsofthemixedscheme
In this section I focus onthemixed scheme, thatis, thecase inwhich both
apublicgoodandapubliclyprovidedprivategoodareused. Toinvestigate
the implications ofsuchascheme, considerthecase inwhich theyareused
optimally:
Proposition3 Inthecaseinwhichbothapurepublicgoodandapublicly
providedprivategoodareusedoptimally, if z isasubstituteforleisure, thenh
actsasanequallump-sum transfertoallindividuals.
Proof W henoptimalpurepublicgoodprovisionandoptimalprovisionof
publiclyprovidedgoodareboth inplace, theFO Cs alsoincludetheoptimal
conditiononthechoiceofh, sothatequation(16) mustbeequaltozero. By
applyingtheenvelopetheorem andgiven 1 ¡ph³@si@B i
´+ @si
@h =0 forsi > 0 , it
follows:
¯±U m2x
¡M R S 1zx¡M R Sm2zx
¢=0 (19 )
L ikewise, theoptimalconditiononthechoiceofgimplies equation(15) be
equaltozero. Solving(15) for ¯±U
m2x andsubstitutinginto(19 ) turns itinto
thecondition:
ÃM R S igx¡pg
M R Sm2gx ¡M R S 1gx
!¡M R S 1zx¡M R Sm2
zx¢=0 (20)
Consider…rstthecaseinwhich M R S igx6=pg. From Proposition1 wehave
thatthe…rstterm ontheL H S of(20) is positive, sothatM R S 1zx= M R Sm2zx ,
whichcorrespondstothecaseinwhichneitherlow- norhigh-abilityindividuals
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northemimickerare crowded out, sothathworks as an equallump-sum
transfertoallindividuals. L ikewise, inthecaseinwhich M R S igx=pg, thatis,
thecaseinwhicha…rstbestsolutionoccursforthepurepublicgoodprovision,
equation (20) implies a…rstbestsolutionforapubliclyprovidedgood, thus
concludingtheproof
T hecaseofoptimaljointprovisionleaves openthe issueofhowtoredis-
tributeeconomicresources from thehigh-abilityindividualstothelow-ability
individuals, whichhasbeenanalysedthroughoutthispaper. Startingfromthe
caseofoptimaljointprovision, supposetoincreasehincrementallyand, atthe
sametime, tomodifythetaxstructure in suchawaythateach individual’s
taxliabilityincreasesbyhismarginalrateofsubstitutionofhforx. Sincethe
mimickerandlow-abilityindividualsfacethesamebudgetconstraintandsince
M R S 1zx > M R Sm2zx;themimickeris crowdedoutatalowervalueofhthan
thevalueatwhichlow-abilityindividualsarecrowdedout. Furthermore, since
B 2 > B 1 and Y2 > Y 1 , and since @si@B i > 0 and @si
@Yi > 0 as longas si is not
crowdedout, themimickerisalsocrowdedoutbeforehonesthigh-abilityindi-
viduals. T heself-selectionconstraintonhigh-abilityindividualsturnsouttobe
relaxed, sothatpubliclyprovidedprivategoodiswelfareenhancing. H owever,
inthespecialcaseinwhich M R S igx=pg, ifz is asubstituteforleisure, then
anincreaseinhis notwelfareenhancing.
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6 Conclusions
T hetwo-typesmodelofnon-linearincometaxationwithasymmetricinforma-
tion on individualability levels is extended todiscuss welfaree¤ects oftwo
policyinstruments: apurepublicgoodandapubliclyprovidedprivategood.
T helatteris interpretedashealthcare.
T hreedi¤erentcasesareanalysed. W henthelevelofthepubliclyprovided
privategoodisgiven, anincreaseinthelevelofthepurepublicgoodprovision
maybewelfareenhancingifthelow-abilitymarginalrateofsubstitutionofg
forxishigherthanthemimicker’smarginalrateofsubstitution.
T hecase inwhichonlythepubliclyprovided privategood is considered,
giventheassumptionthatz isasubstituteforleisure, impliesthatanincrease
inthelevelofitiswelfareenhancingbyrelaxingtheself-selectionconstrainton
high-abilityindividuals.
B ycontrast, whenoptimalpurepublicgoodprovisionandoptimalprovi-
sionofpubliclyprovidedgoodarebothinplace, thislatteractsasalump-sum
transfertoallindividuals. H owever, itis stillpossibletoredistributeeconomic
resourcesfrom thehigh-abilityindividualstothelow-abilityindividualsbyin-
creasingthelevelofthepubliclyprovidedprivategoodaslongasanunder- or
anover-provisionofthepurepublicgood(comparedwiththe…rstbestopti-
mum)occurs.
A numberofissuesremainopenforfurtherresearch. A …rstissueistoallow
forpricinginstruments availabletothegovernmenttobeintroduced, suchas
aperunitsubsidyongoodz. FollowingB lomquistandChristiansen(19 9 9 ), a
second issuewouldbetheattempttomergethenormativeapproachandthe
publicchoiceapproachintoasinglemodeltoderiveconditions forane¢cient
choiceofdistributionalpolicywithinapoliticaleconomyframework.
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Working Papers
The full text of the working papers is downloadable at http://polis.unipmn.it/
* Economics series **political theory series
2000 n. 13* Roberto Zanola, Public goods versus publicly provided private goods in a two-class economy
2000 n. 12** Gabriella Silvestrini, Il concetto di <<governo della legge>> nella tradizionerepubblicana.
2000 n. 11** Silvano Belligni, Magistrati e politici nella crisi italiana.Democrazia dei guardiani e neopopulismo
2000 n. 10* Rosella Levaggi and Roberto Zanola, The Flypaper Effect: Evidence from theItalian National Health System
1999 n. 9* Mario Ferrero, A model of the political enterprise
1999 n. 8* Claudia Canegallo, Funzionamento del mercato del lavoro in presenza diinformazione asimmetrica
1999 n. 7** Silvano Belligni, Corruzione, malcostume amministrativo e strategie etiche. Ilruolo dei codici.
1999 n. 6* Carla Marchese and Fabio Privileggi, Taxpayers Attitudes Towaer Risk andAmnesty Partecipation: Economic Analysis and Evidence for the Italian Case.
1999 n. 5* Luigi Montrucchio and Fabio Privileggi, On Fragility of Bubbles inEquilibrium Asset Pricing Models of Lucas-Type
1999 n. 4** Guido Ortona, A weighted-voting electoral system that performs quite well.
1999 n. 3* Mario Poma, Benefici economici e ambientali dei diritti di inquinamento: ilcaso della riduzione dell’acido cromico dai reflui industriali.
1999 n. 2* Guido Ortona, Una politica di emergenza contro la disoccupazione semplice,efficace equasi efficiente.
1998 n. 1* Fabio Privileggi, Carla Marchese and Alberto Cassone, Risk Attitudes and theShift of Liability from the Principal to the Agent
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Department of Public Policy and Public Choice “Polis”
The Department develops and encourages research in fields such as:
• theory of individual and collective choice;
• economic approaches to political systems;
• theory of public policy;
• public policy analysis (with reference to environment, health care, work, family, culture, etc.);
• experiments in economics and the social sciences;
• quantitative methods applied to economics and the social sciences;
• game theory;
• studies on social attitudes and preferences;
• political philosophy and political theory;
• history of political thought.
The Department has regular members and off-site collaborators from other private or public organizations.
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Instructions to Authors
Please ensure that the final version of your manuscript conforms to the requirements listed below:
The manuscript should be typewritten single-faced and double-spaced with wide margins.
Include an abstract of no more than 100 words.
Classify your article according to the Journal of Economic Literature classification system.
Keep footnotes to a minimum and number them consecutively throughout the manuscript with superscript Arabic numerals.Acknowledgements and information on grants received can be given in a first footnote (indicated by an asterisk, notincluded in the consecutive numbering).
Ensure that references to publications appearing in the text are given as follows:COASE (1992a; 1992b, ch. 4) has also criticized this bias....and“...the market has an even more shadowy role than the firm” (COASE 1988, 7).
List the complete references alphabetically as follows:
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Periodicals:KLEIN, B. (1980), “Transaction Cost Determinants of ‘Unfair’ Contractual Arrangements,” American Economic Review,70(2), 356-362.KLEIN, B., R. G. CRAWFORD and A. A. ALCHIAN (1978), “Vertical Integration, Appropriable Rents, and theCompetitive Contracting Process,” Journal of Law and Economics, 21(2), 297-326.
Monographs:NELSON, R. R. and S. G. WINTER (1982), An Evolutionary Theory of Economic Change, 2nd ed., Harvard UniversityPress: Cambridge, MA.
Contributions to collective works:STIGLITZ, J. E. (1989), “Imperfect Information in the Product Market,” pp. 769-847, in R. SCHMALENSEE and R. D.WILLIG (eds.), Handbook of Industrial Organization, Vol. I, North Holland: Amsterdam-London-New York-Tokyo.
Working papers:WILLIAMSON, O. E. (1993), “Redistribution and Efficiency: The Remediableness Standard,” Working paper, Center forthe Study of Law and Society, University of California, Berkeley.