Regulation Versus Taxation / Alberto F. Alesina, Francesco Passarelli.

Format:

Book

Author/Creator:

Alesina, Alberto F.

Contributor:

National Bureau of Economic Research.

Passarelli, Francesco.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16413.

NBER working paper series no. w16413

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

We study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces the negative externality, a quota that forces a proportional reduction of the activity, and a proportional tax on it. For all instruments the majority chooses levels which are too restrictive when the activity is performed mainly by a small fraction of the population, and when costs for reducing activities or paying taxes are sufficiently convex. Also a majority may prefer an instrument different than what a social planner would choose; for instance a rule when the social planner would choose a tax.

Notes:

Print version record

September 2010.