An alternative way to model merit good arguments

Besley [J. Public Econ. 35 (1988) 371] uses a scaling approach to model merit good arguments in commodity tax policy. In this paper, I question this approach on the grounds that it produces 'wrong' recommendations-taxation (subsidisation) of merit (demerit) goods-whenever the demand for the (de)merit good is inelastic. I propose an alternative approach that does not suffer from this deficiency and that allows for a straightforward interpretation.