Wow! eBook
The Marginal Cost of Public Funds
Author(s): Per-Olov Johansson (Author), Bengt Kriström (Author)
- Publisher: Cambridge University Press
- Publication Date: 29 May 2025
- Language: English
- Print length: 88 pages
- ISBN-10: 1009620487
- ISBN-13: 9781009620482
Book Description
In a perfect market economy, the cost of raising another euro of tax revenue equals one. However, once distortionary taxes on goods and factors are introduced, the marginal cost of public funds, MCPF, typically deviates from one. Often it exceeds one, but one can also find cases where it falls short of one. This Element introduces the concept of the MCPF, sketches its history, and discusses a number of applications. It does this by undertaking economic evaluations of public sector projects involving a pure public good. An important distinction in the literature relates to where the government has access to lump-sum taxation versus where it must rely on changing a distortionary tax. These are often unit taxes or proportional taxes. Sometimes they are even introduced to alleviate a problem. An example is a tax on emissions of greenhouse gases. This title is also available as Open Access on Cambridge Core.
Editorial Reviews
Book Description
This Element provides an up-to-date review of the concept of the marginal cost of public funds.
