This paper focuses on pure redistribution among two regional governments. We abstract from mobility of tax bases and externalities in public goods not because they are unimportant, but because they are already well understood. Under conditions of full information, unlimited commitment capacity, and no spillover effects across regions, optimal redistribution is lump sum But these ideal circumstances are seldom met. One of the central results of the paper is that, to cope with asymmetric information, optimal regional redistribution must distort the tax rate chosen by the poor region away from the second best.
Bordignon M., Manasse P., Tabellini G. (2001). Optimal regional redistribution under asymmetric information. THE AMERICAN ECONOMIC REVIEW, 91(3), 709-723 [10.1257/aer.91.3.709].
Optimal regional redistribution under asymmetric information
Manasse P.;
2001
Abstract
This paper focuses on pure redistribution among two regional governments. We abstract from mobility of tax bases and externalities in public goods not because they are unimportant, but because they are already well understood. Under conditions of full information, unlimited commitment capacity, and no spillover effects across regions, optimal redistribution is lump sum But these ideal circumstances are seldom met. One of the central results of the paper is that, to cope with asymmetric information, optimal regional redistribution must distort the tax rate chosen by the poor region away from the second best.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
