A Simulation on the Public Good Provision Under Various Taxation Systems

This paper integrates two traditions in taxing theory by constructing a primitive general equilibrium (GE) model which incorporates a public good, and examine the desirability of taxing system to sustain its optimum level. Formally, we start with utilizing the Lindahl mechanism to compute a Pareto-optimal public good level under a specification of the parameters on production and utility function, with k the substitution parameter on the latter. The burden-sharing in this Lindahl mechanism is called the Lindahl tax. We compute the rates of various taxes in order to sustain the optimal public good level, and compare the Gini coefficients and the social welfares. It is shown for a specified case that when 0