Johanna Jussila Hammes
() and Svante Mandell
Johanna Jussila Hammes: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Svante Mandell: VTI and KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Abstract: We study two districts’ voluntary co-financing of a centrally provided public good. Income taxes are collected both by the two local governments and by the central government. We compare outcomes with a surplus-maximizing level of public good provision. We show that co-financing per se does not influence the amount of public good provided. Co-financing and lobbying are substitutes, so that increased co-financing lowers the marginal amount of lobbying by a district. The production of the public good is closer to the surplus-maximizing level with co-financing and lobbying than with only lobbying. Including spillovers into the model, the provision of the public good can fall below the surplus-maximizing level if co-financing exceeds some threshold value. In order to understand the Swedish government’s claim that co-financing increases funds available for public good provision, we must assume that the central government’s ability to tax its citizens is limited. In this case, co-financing can raise the amount of the public good provided compared with pure central government provision.
30 pages, April 15, 2016
Full text files
Questions (including download problems) about the papers in this series should be directed to CTS ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2018-02-19 14:59:49.