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Paqué, Karl-Heinz
Year of Publication: 
[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1984
Series/Report no.: 
Kiel Working Paper 202
Until recently the concept of tax expenditures has been exclusively analyzed along traditional Pigouvian lines. Broadly speaking, the introduction of tax/subsidy-schemes was considered to be justified whenever large number externalities prevent the market from working efficiently. This approach - while fruitful and important in its own right - neglects a fundamental policy problem, namely the public choice option between tax expenditures and direct government spending: independent of any welfare theoretic rationale for public intervention, there remains the question which kind of intervention - tax expenditure (implicit subsidization) or direct expenditure - is the most efficient solution.
Document Type: 
Working Paper
Document Version: 
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