econ434notes35a

econ434notes35a - Tax Y Will still run a very small...

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Trade off between regulation and non-regulation Type 1 Type 2 Cheng November 28, 2005 Notes Public Choice Literature Is government too big, too small, or just right? What Governments Should Do: - Roads and highways . Although it may not seem so from the definition of public goods (as follows), there are transaction costs that would most likely be higher if roads and highways were left to the private sector. PUBLIC GOODS a. Non rivalry b. Non exclusion But we have many transaction costs And we also have informational problems. Asymmetric. - Negative Externalities. – Government should deal with pollution and other negative externalities with fines and taxes. PUBLIC GOODS - Defense - Courts - Cops
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Spending Structure
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Unformatted text preview: Tax Y Will still run a very small deficit. Cheng November 28, 2005 Notes Richard Musgrave- a 3-budget approach to government 1. Allocative- pollution or whatever. Benefit Principle of Taxation . MUx/ Px = MUy/ Py = MU g/ Tg Total Amount of Tax Revenue = Total Amount of Spending. -The amount collected from those who benefit should be the exact amount spent. 2. Distribution Ability to pay Principle of Taxation . Definition of Welfare : Benefit (to you)/ Total Sum of Benefit > Taxes (you pay)/ Total Sum of Taxes Ex. The farming, corn, industry. 3. Stability We have a normative trap when it comes to property rights. Spending = TR Welfare Paid = Tax...
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This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

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econ434notes35a - Tax Y Will still run a very small...

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