The signaling effect of tax policy
Barigozzi, Francesca; Villeneuve, Bertrand (2006), The signaling effect of tax policy, Journal of public economic theory, 8, 4, p. 611-630. http://dx.doi.org/10.1111/j.1467-9779.2006.00281.x
TypeArticle accepté pour publication ou publié
Journal nameJournal of public economic theory
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Abstract (EN)The paper focuses on the signaling value of a tax when agents are less informed than the government on the effect of their consumption. The policy making process is analyzed as a game in which the government wants to influence consumers' behaviors through tax policy, consumers being rational and Bayesian. The marginal cost of public funds induces the government to provide biased information to pursue budgetary objectives. We analyze the tax distortion that is required for credibility.
Subjects / Keywordstax policy; marginal cost of public funds; information bias; signaling
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