Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Distribution, Discounting and Climate Policy Location: B136 Session Chair: Aurel Mélard, Ecole Polytechnique - Institut Polytechnique de Paris | |
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Public Goods and Optimal Taxation under Multidimensional Heterogeneity 1: Umeå University; 2: University of Gothenburg, Sweden This paper revisits the problem of public goods provision under optimal nonlinear income taxation, assuming multidimensional heterogeneity in abilities, preferences, and exposure to public goods, respectively, by using a variational approach. The generalization in terms of heterogeneity is found to have crucial implications for the optimal provision rule, and in particular for understanding when and how to optimally take distributional concerns into account in public-good provision. We show how a discrepancy between the individual and cross-sectional income elasticities of the marginal willingness to pay for the public good causes the policy rule to deviate from the Samuelson condition. The sufficient statistic describing this discrepancy is then disentangled into preference heterogeneity and heterogeneity in the exposure to public goods, where it is argued that the latter heterogeneity is likely particularly important from a practical policy perspective. Overall, the results suggest that it is often optimal to take distributional aspects into account also in public good provision, instead of delegating such concerns solely to the tax and transfer system as is sometimes suggested. | |