Public Finance, 2nd Edition

complicating issues, 258±259

defensive measure questions, 254±257

key points, 260

marginal cost equilization, 257±258

overview, 253±254

U.S. antipollution legislation, 262±263

Musgrave, Richard

Haig±Simons income versus expenditures,

348±349

three branches of government, 68

(footnote 3)

Nash ineYciency, mobility, federalism, 886

National Oceanic and Atmospheric

Administration, 796±797

Natural monopoly

decreasing cost industries, 273

deWnition, 271

Necessities, optimal commodity tax problem,

435±436

NOAA, see also National Oceanic and

Atmospheric Administration

Non-dictatorship

Arrow's impossibility theorem, 87

Gibbard±Satterthwaite theorem, 93

Nonexclusive goods, see also Samuelsonian

nonexclusive goods

Non-manipulability, Gibbard±Satterthwaite

theorem, 93

Nonmarketed beneWts

Wrst-best environment

defensive behavior, 790±791

hedonic price technique, 791±795

overview, 788±789

substitute products, 790±791

surveys, 795±797

underlying beneWt evaluation, 789±790

second-best analysis, 797±800

Nonoptimal income distribution, cost±beneWt

analysis

Boadway framework, 811±812

Weisbrod framework, 812±816

Nonoptimal taxes, production decisions

balanced-budget changes in t and Z,

708±709

basic rules, 704±705

overview, 701±703

special cases, 706±707

tax rules, 703±704

Nonvoters, median voter model, 912

Normative public sector theory

allocation of resources, 17

distribution of income, 15±17

Wscal federalism, 25±26

fundamental questions, 5±7

government, humanism, consumer

sovereignty, and capitalism, 7±8

government expenditure theory, 7

government policy goals

eYciency, 9

equity, 9±12

government as agent, 12±13

legitimate functions, 8±9

policy goals, 9

government sector, U.S., 20±23

private information, 17±20

public choice theory, 26±29

theory of taxation, 23±25

welfare economics, 14±15

Notch problem, targeted cash transfers, 636

Oates, Wallace, Wscal federalism

decentralization theorem, 837±839

perfect correspondence, 836±837

OYce of Management and Budget, public rate

of discount, 755±756

Okun's leaky bucket

Atkinson social welfare function, 110±112

optimal income taxation, 503±504

social welfare function, 108±109

OLG, see also Overlapping generations model

Oligopoly, Harberger incidence model,

569±570

OMB, see also OYce of Management and

Budget

One person's dead-weight loss, tax incidence,

547±548

Opportunity costs

pollution

standards legislation, 243

public funds

consumption±investment mix, 737±738

Harberger and Sjaastad±Wisecarver

models, 750±752

MRS, 734±736

MRT, 736±737

overview, 733

Optimal commodity tax

basic problem, 430

broad-based taxation, 433±435

covariance interpretation, 469±471

deWnition, 429

equations, 431±432

inverse elasticity rule, 437±438

many-person economies, 465±469

INDEX 941