Thomas Aronsson, Mikael Markström, Tomas Sjögren

Public Provision of Private Goods and Equilibrium Unemployment

Section: Articles
FinanzArchiv (FA)

Volume 61 () / Issue 3, pp. 353-367 (15)

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This paper deals with public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. The results show that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which may justify either more or less public provision than under perfect competition. The paper also addresses employment-related motives behind public provision of private goods.

Thomas Aronsson No current data available.

Mikael Markström No current data available.

Tomas Sjögren No current data available.