nep-pbe New Economics Papers
on Public Economics
Issue of 2008‒12‒14
ten papers chosen by
Oliver Budzinski
Philipps-University of Marburg

  1. Fundraising through Competition: Evidence from the Lab By Henrik Orzen
  2. Do threshold patterns matter in public good provision? By Ye, Maoliang; Nikolov, Plamen; Casaburi, Lorenzo; Asher, Sam
  3. Can We Tax the Desire for Tax Evasion? By Dzhumashev, Ratbek; Gahramanov, Emin
  4. Rebate Rules in Threshold Public Good Provision By Michael A. Spencer; Stephen K. Swallow; Jason F. Shogren; John A. List
  5. The Economic impact of Repealing Mississippi's Grocery Tax By Myles, Albert E.; Allen, Albert J.; Shaik, Saleem
  6. Tax Competition and Foreign Direct Investment: assessing the role of market potential and trade costs in a "Footloose Capital" framework By Vincent Delbecque
  7. Intermunicipal cooperation and privatization of solid waste services among small municipalities in Spain By Germà Bel; Melania Mur
  8. Debt Capitalization: A New Perspective on Ricardian Equivalence By David Stadelmann; Reiner Eichenberger
  9. Economics and Corporate Social Responsibility By Markus Kitzmueller
  10. Return on Investments for Community Infrastructure Projects? A Foundation for Rural Development Strategy. By Amanor-Boadu, Vincent; Burns, Michael

  1. By: Henrik Orzen (University of Nottingham)
    Abstract: This paper investigates mechanisms for the private provision of a public good which utilize competition to incentivize contributions. Theory predicts that “all-pay” competition is particularly effective for fundraising. Within this class of mechanisms different types of lotteries and all-pay auctions are analyzed and ranked. Four all-pay competition mechanisms are then examined in a laboratory experiment vis-à-vis a voluntary contribution mechanism (VCM). All four outperform the VCM and towards the end of the experiment fully efficient outcomes are attained in the “lowest common denominator” scheme, which is particularly accommodating for people who have a preference for cooperating conditionally on others doing their bit.
    Keywords: Public Goods; Provision Mechanisms; Experiments; Contests
    JEL: C72 C92
    Date: 2008–10
  2. By: Ye, Maoliang; Nikolov, Plamen; Casaburi, Lorenzo; Asher, Sam
    Abstract: There is a substantial literature examining coordination in public goods games. We conducted an experiment to explore how varying patterns of thresholds affect the willingness of subjects to contribute to a public good. We had subjects play a multi-period game where each subject was allocated an initial point endowment and told a threshold for the group had to choose how much to contribute to the common pot. Each period is identical, except for the possibility of having a different threshold, which is always stated before the players make their contributions. We found that while contributions are similar for the increasing and decreasing threshold group types when thresholds were low, a sizeable gap opens up around the average threshold size. We found that for nearly every threshold, it is more profitable to be in an increasing than in a decreasing threshold group type. Early cooperation seems to facilitate the achievement of harder-to-reach thresholds, which require considerable contributions from all members of the group. These findings are also very robust in the regression specifications. Our findings shed light on the role of past cooperative success and threshold patterns on subsequent willingness to cooperate.
    Keywords: Experimental economics; Public goods decision making
    JEL: G14 D81 C92 H41 C91
    Date: 2008–12–08
  3. By: Dzhumashev, Ratbek; Gahramanov, Emin
    Abstract: Simply by extending a well-known Yitzhaki (1974) static income tax evasion model to a dynamic one with Ak(t) technology, Lin and Yang (2001) conclude that higher taxes encourage tax evasion. We show that once the Lin and Yang (2001) model becomes fully compatible with the Yitzhaki (1974) model, a completely opposite analytical result follows. We then extend the Lin and Yang (2001) setting to account for a productive government and costly compliance, and derive corresponding analytical conditions for the ecient size of the public sector.
    Keywords: Tax Evasion; Optimal Taxation; Economic Growth
    JEL: H21 D91 H26
    Date: 2008–11–24
  4. By: Michael A. Spencer; Stephen K. Swallow; Jason F. Shogren; John A. List
    Abstract: This paper considers how six alternative rebate rules affect voluntary contributions in a threshold public-good experiment. The rules differ by (1) whether an individual can receive a proportional rebate of excess contributions, a winner-takes-all of any excess contributions, or a full rebate of one’s contribution in the event the public good is provided and excess contributions exist, and (2) whether the probability of receiving a rebate is proportional to an individual’s contribution relative to total contributions or is a simple uniform probability distribution set by the number of contributors. The paper adds to the existing experimental economics literature on threshold public goods by investigating both aggregate and individual demand revelation under the winner-take-all and random full-rebate rules. Half of the rules (proportional rebate, winner-take-all with uniform probability among all group members, and random full-rebate with uniform probability) provide total contributions that nearly equal total benefits, while the rest (winner-take-all with proportional probability, winner-take-all with uniform probability among contributors only, and random full-rebate with proportional probability) exceed benefits by over 30 percent. Only the proportional rebate rule is found to achieve both aggregate and individual demand revelation. Our experimental results have implications for both fundraisers and valuation practitioners.
    JEL: C9 C91 C92 H4 H41 Q0 Q5
    Date: 2008–12
  5. By: Myles, Albert E.; Allen, Albert J.; Shaik, Saleem
    Abstract: Results from the analyses indicate that repealing the 7 percent grocery tax would produce modest gains in grocery sales but major increases in the purchases of other goods and services. Revenues from the sale of additional groceries would be exempt from taxes, thus producing only employment and labor income. With the state loosing almost $202 million in tax revenues, it is not clear if the gains in employment would be enough to offset the revenue losses.
    Keywords: Agribusiness, Public Economics,
    Date: 2008
  6. By: Vincent Delbecque
    Abstract: This paper investigates the impact of the corporate income tax on the geographical distribution of French firms Foreign Direct Investment port- folio across 26 European countries. The empirical assessment is based on Baldwin (1999) new economic geography model in which we focus on the location of firms with respect to level of taxation. In this model, the magnitude of the impact of taxation on location decision partly depends on the market size and the level of trade costs. Indeed, firms may not only seek lower production costs but better market access and market opportunity when investing abroad. Through panel data regressions, we find a negative impact of the corporate income tax rate on Foreign Direct Investment. We also find that trade costs between source and host coun- try increases Foreign Direct Investment. In advanced specifications we show that increasing trade costs reduce the impact of tax level on capital location.
    Keywords: Corporate taxation, Firm-level data, Foreign Direct Investment, Trade Costs
    JEL: F23 H25 F21 R38 C33
    Date: 2008
  7. By: Germà Bel (Faculty of Economics, University of Barcelona); Melania Mur (Universidad de Zaragoza)
    Abstract: The aim of this paper is to analyze the effects of intermunicipal cooperation and privatization on the delivery costs of urban solid waste services. The results of our empirical analysis, which we conducted among a sample of very small municipalities, indicate that small towns that cooperate incur lower costs for their waste collection service. Cooperation also raises collection frequency and improves the quality of the service in small towns. By contrast, the form of production, whether it is public or private, does not result in systematic differences in costs. Interestingly, the degree of population dispersion has a significant positive relation with service costs.No evidence of scale economies is found because, it would seem, small municipalities exploit them by means of intermunicipal cooperation.
    Keywords: local government, intermunicipal cooperation,privatization, contracting-out, solid waste collection.
    Date: 2008–12
  8. By: David Stadelmann; Reiner Eichenberger
    Abstract: Rational individuals know that present government debts transform into higher future taxes. The Ricardian equivalence implies that the burden of the debt is not shifted between generations because of compensating intergenerational transfers. While the assumptions for Ricardian equivalence to hold are quite demanding, we argue that there exists another equivalence mechanism which works also with non-altruistic individuals: Public debts capitalize into property values. Thus, communities with larger net debts exhibit, ceteris paribus, lower property prices. We provide empirical evidence for debt capitalization using unique data for the Swiss metropolitan area of Zurich.
    Keywords: Capitalization; Public Debts; Ricardian Equivalence; Taxes; Local Public Goods
    JEL: H74 R51 H00
    Date: 2008–11
  9. By: Markus Kitzmueller
    Abstract: Corporate Social Responsibility (CSR) is an important economic phenomenon with broad implications for .rms, employees, consumers, investors, governments and NGOs alike. This paper collects, structures and combines scattered pieces of economic theory and empirical evidence in novel ways that shed light on various fundamental economic questions related to CSR. The main conjecture presents individual preferences as the ultimate driving force behind any form of CSR. In the presence of social stakeholder preferences, firms may use strategic CSR to maximize profits, while not-for-profit CSR may satisfy shareholders. social ambitions. Only if managers take CSR beyond strategic levels or shareholder preferences, does CSR constitute moral hazard. Incentives and mechanisms underlying for-profit CSR will be outlined in greater detail. Six frameworks for the analysis of strategic CSR are proposed and analyzed. Finally, some empirical issues related to measurement and estimation of CSR are briefly discussed.
    Keywords: Corporate Social Responsibility, Public Goods Provision, Preferences, Strategic CSR
    JEL: D21 D6 H11 L21 L22 M14
    Date: 2008
  10. By: Amanor-Boadu, Vincent; Burns, Michael
    Abstract: With decreasing populations and declining resources, rural governments are finding it challenging determining how to make investments in their infrastructure. This paper defines the problem confronting rural governments and develops a process for making infrastructure decisions to maximize community welfare.
    Keywords: Infrastructure, Public Goods, Rural Development, Social Welfare Economics, Community/Rural/Urban Development, Public Economics,
    Date: 2008

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