Public Finance, 2nd Edition

Public funds, opportunity cost

consumption±investment mix, 737±738

MRS, 734±736

MRT, 736±737

overview, 733

Public goods

Auerbach±KotlikoV OLG model, 611, 615

decreasing cost services, 295±297

nonexclusive goods, 170±193, 660±668

pure, see also Pure public goods

Public insurance, redistributive transfers,

326±327

Public rate of discount, 731±757

Bradford model, 743±748

expert analysis, Weitzman, 753±755

federal government, 755±756

other views, 748±753

theoretical considerations, 740±743

Public sector theory

baseline general equilibrium model, 33±64

Wrst-best analysis, model dichotomies,

67±71

lump-sum redistributions, 66±67

normative, see also Normative public sector

theory

second-best analysis, 71±79, 387±398,

625±630

similarities between Wrst, second-best

analysis, 79±80

Public services, local

capitalization, empirical estimations,

872±873

optimal federalism mobility, 858±859

Pure economic proWts, Wrst-best beneWt

measures, 785

Pure losses, one-consumer economy, 448±451

Pure private goods

deWnition, 156±157

Pure proWts, one-consumer economy, 448±451

Pure public goods

deWnition, 156

worst case scenario, 157±159

Pure tax incidence

economy-wide tax incidence, 595±597

theoretical measures, 532±540

Rate of discount, see Public rate of discount

Rawlsianism, social welfare function, 82±85

Realism, second-best analysis, 388±389

Realized gains, taxation, Auerbach's scheme,

373±375

Redistributions

Auerbach±KotlikoV OLG model, 611±614,

616

equal access, 328

federalism, see also Fiscal federalism

grants-in-aid, via matching grants, 903±905

lump-sum

Wrst-best analysis, 67±68

private information, 487±489

public sector theory, 66±67

pareto±optimal, see also Pareto±optimal

redistributions

public insurance, 326±327

social status, 327±328

Regional multiplier game, cost±beneWt

analysis, 728, 822±823

Regressive tax, vertical equity, 352±353

Resources

allocation, public sector economics, 17

drafting, second-best analysis, 76

Richardian equivalence, Auerbach±KotlikoV

OLG model, 613

Risk-free investment, Auerbach's

retrospective taxation scheme, 374

Risk, Arrow±Lind theorem, 770±771

Roy's identity, demand estimation, 293±295

SacriWce

principles, vertical equity

aggregate sacriWce minimization, 354±355

equal sacriWce, 355±356

Young's prescription, 356±361

Sales tax, Pechman±Okner studies, 589±590

Samaritan's dilemma, Wrst-best transfers,

633±634

Samuelsonian nonexclusive goods

Wrst-best analysis, 170±193

free-rider problem, see also Free rider

problem

government in general equilibrium model,

172±173

incidence, 583±585

overview, 170±172, 579±583

policy problems, 176±178

preference revelation and taxation, 184±187

public good payment, 178±179

second-best allocation, 660±668

Wrst-best allocation relationship, 664±667

taxation beneWts-received principle,

179±184

Savings, Auerbach±KotlikoV OLG model,

613, 617

Scale invariance, Young's taxation principles,

358

944 INDEX