The efficient provision of public goods through non-distortionary tax contests

Thomas Giebe; Paul Schweinzer

We use a simple balanced budget contest to collect taxes on a private good in order to finance a pure public good. We show that-with an appropriately chosen structure of winning probabilities-this contest can provide the public good efficiently and without distorting private consumption. We provide extensions to multiple public goods and private taxation sources, asymmetric preferences, and show the mechanism's robustness across these settings.

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Year of publication:	2011
Authors:	Giebe, Thomas ; Schweinzer, Paul
Publisher:	Mannheim [u.a.] : Sonderforschungsbereich/Transregio 15
Subject:	Taxation \| Contests \| Efficiency \| Öffentliche Güter \| Public goods \| Versorgung \| Supply situation \| Spieltheorie \| Game theory \| Finanzierung \| Financing \| Steuerwettbewerb \| Tax competition \| Theorie \| Theory