Democracy, Redistributive Taxation and the Private Provision of Public Goods

TY - UNPB

T1 - Democracy, Redistributive Taxation and the Private Provision of Public Goods

AU - Markussen, Thomas

N1 - JEL Classification: D31, D7, H2, H41, I22

PY - 2010

Y1 - 2010

N2 - The paper studies in a simple, Downsian model of political competition how the private provision of public goods is affected when it is embedded in a system of democracy and redistributive taxation. Results show that the positive effect of inequality on public goods production, which Olson (1965) pointed to, is weakened and might even be reversed in this context. Also, the median voter may choose a negative tax rate, even if he is poorer than the mean, in order to stimulate public goods production. The relevance of the model is illustrated with an application to the finance of higher education.

AB - The paper studies in a simple, Downsian model of political competition how the private provision of public goods is affected when it is embedded in a system of democracy and redistributive taxation. Results show that the positive effect of inequality on public goods production, which Olson (1965) pointed to, is weakened and might even be reversed in this context. Also, the median voter may choose a negative tax rate, even if he is poorer than the mean, in order to stimulate public goods production. The relevance of the model is illustrated with an application to the finance of higher education.

KW - Faculty of Social Sciences

KW - politisk økonomi

KW - political economy

KW - inequality, taxation

KW - higher education

M3 - Working paper

BT - Democracy, Redistributive Taxation and the Private Provision of Public Goods

PB - Department of Economics, University of Copenhagen

ER -