Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74497
Authors: 
Giebe, Thomas
Schweinzer, Paul
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4228
Abstract: 
We revisit the classical result that financing a pure public good through taxation of private consumption is inefficient. To this standard setup we add a consumption contest in which consumers can win a prize. We show that an appropriately chosen contest - which we call a 'tax lottery' - can correct the distortion in private consumption while, at the same time, inducing efficient provision of the public good and balancing the government's budget. The result does not depend on whether the public good is provided exogenously or dependent on actual tax revenue. We show that neither pure fundraising contests nor a sales tax combined with a 'simple' lottery can induce efficiency in the standard environment.
Subjects: 
public goods
taxation
contests
lotteries
JEL: 
C70
D70
H00
Document Type: 
Working Paper

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