Public Finance, 2nd Edition

aggregate production externalities, 212±213

nonexclusive goods, 181

Plug±van Praag±Hartog Wrst-best tax

methodology, 511±512

Policy-relevant externalities

overview, 145±146

public sector analysis, 146±147

Pollution analysis

consumption±production externalities

interpersonal equity conditions, 237

overview, 235±237

pareto±optimal conditions, 237±239

marginal cost equalization, 257±258

standards legislation

consumption±production externality, 241

diYculties, 239±240

least-cost taxing, 243±245

opportunity cost minimization, 243

pareto±optimal condition, 242

second-best approach, 240

U.S. antipollution policies, 262±270

Poverty

Jorgenson analysis, 132±134

pareto±optimal redistribution, 313±315

PPH methodology, see also Plug±van

Praag±Hartog methodology

Present value calculations

cost±beneWt analysis, 720±721, 806±808

Marglin±Feldstein view, 748±750

opportunity cost of public funds

consumption±investment mix, 737±738

MRS, 734±736

MRT, 736±737

overview, 733

project beneWt reinvestment, 738±739

social rate of time preference, 739±740

Principal±agent problem, private information,

18

Private donations, crowding out

Andreoni model of public, private charity,

322±326

public choice perspective, 310

Private information

bargaining, 671±674

Besley±Coate model of welfare stigma,

651±655

Besley±Coate model of workfare, 646±651

in-kind transfers

Blackorby±Donaldson model, 641±646

lump-sum redistributions, 487±489

market power, 674±676

nonexclusive externalities, 676±677

overview, 493±494, 668±669

public sector economics, 17±20

second-best analysis, 76, 393±396

second-best public expenditure, 628

taxation, 485±522

Private investment

consumption mix, opportunity cost of

public funds, 737±738

discount rate, 722±724

uncertainty, 724

Process equity, government policy goals,

10±11

Production externalities

condensed model, 206±208

deWnition, 148

municipal waste-treatment facilities,

254±257

nonconvex production, 229±231

Production rules

nonoptimal taxes

balanced-budget changes in t and Z,

708±709

basic rules, 704±705

special cases, 706±707

second-best analysis, equity role, 709±714

Progressive tax

vertical equity, 352±353

Young's vertical equity principles, 360±361

Project beneWts, reinvestment, 738±739

Property rights, aggregate production

externalities, 228±229

Property tax

commercial and industrial, median voter

model, 912

incidence, 568±569

Pechman±Okner studies, 590±592

Proportional tax

dead-weight loss generation, 418±419

vertical equity, 352±353

Young's vertical equity principles, 359±360

Public agencies, Boiteux problem, 687±689

Public assistance

cash transfers, 636±638

private giving comparison, 324±326

Public choice theory

overview, 309±311

public sector economics, 26±29

Public discount rate, cost±beneWt analysis,

723, 731±757

Public

expenditures, second-best analysis

basic analysis technique, 625±626

government production, 629

private information, 628

social welfare maximization, 627

INDEX 943