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| Author: | Cremer, H. Gahvari, F. |
| Title: | In-kind transfers, self-selection and optimal tax policy |
| Journal: | European Economic Review
1997 : JAN, VOL. 41:1, p. 97-114 |
| Index terms: | TAXATION POLICY WELFARE PARETO LAW OPTIMIZATION |
| Language: | eng |
| Abstract: | The paper examines the role of public provision of goods as a redistributive mechanism when tax policies are designed optimally on the basis of the information available to the government. Pareto-efficient allocations that are attainable through the tax policy are characterized. The conditions are derived, under which public provision will enhance welfare above the maximum that can be achieved through a mix of general income tax and commodity taxes (price subsidies). As to the study, first it is proved that once there are two produced goods, public provision always is Pareto-improving. Second, a sufficient condition for public provision is derived to be Pareto-improving. Examples included. |
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