Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93888
Authors: 
Bierbrauer, Felix
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 97
Abstract: 
This paper combines the problem of optimal income taxation with the free-rider problem in public good provision. There are two groups of individuals with private information on their earning ability and their valuation of a public good. Adjustments of the transfer system are needed to discourage the more productive from exaggerating the desirability of public good provision. Similarly, the less productive need to be prevented from understating their valuation. Relative to an optimal income tax, which focuses solely on earning ability, income transfers are increased whenever a public good is installed and are decreased otherwise.
Subjects: 
Income Taxation
Public Good Provision
Revelation of Preferences
Two-dimensional Heterogeneity
JEL: 
D71
D82
H21
H41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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