Optimal Provision of Public Goods with Rank Dependent Expected Utility

In this paper the theory of rank-dependent expected utility (RDEU) is substituted for the theory of expected utility (EU) in a model of optimal provision of public goods. The substitution generalizes the Samuelson rule, previously modified to include deadweight loss and tax evasion loss. Under given assumptions it is demonstrated that the marginal cost of public funds is higher in a RDEU model than in a corresponding EU model.

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Year of publication:	1998
Authors:	Eide, Erling
Published in:	Public Finance = Finances publiques. - Vol. 53.1998, 3-4, p. 296-311

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008475312