BibTeX
@MISC{Boyer08governmentorganization,
author = {Pierre Boyer},
title = {Government Organization and Public Goods Provision∗},
year = {2008}
}
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Abstract
This paper studies the impact of budget competition on public goods provision by Min-istries where individual preferences are private information. The government is composed by two Ministries, each Ministry being an inequality-averse utilitarian planner which pro-vides one public good. Public goods provision and tax schedules are decentralized at the Ministry level. Taxes are collected by the government and become the total budget that Ministries have to share. In this environment, Ministries do not internalize the impact on the others, through the (unique) budget constraint, when they compete for higher share of the total budget. Outside of the cooperative equilibrium, the Ministry which obtains a higher share of the total budget relaxes its redistributive and consumers ’ incentive com-patibility constraints. Nevertheless, this pushes the second Ministry to distort its public good provision further away of the efficient allocation.
Keyphrases
public good provision total budget government organization budget constraint ministry level budget competition private information efficient allocation com-patibility constraint inequality-averse utilitarian planner tax schedule paper study second ministry individual preference cooperative equilibrium
