Bordignon, Massimo (1989) An investigation in the theory of voluntary provision of public goods and income tax evasion under the hypothesis of ethical behaviour on the part of economic agents. PhD thesis, University of Warwick.

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Abstract

In this work we discuss a number of issues in the theory of
voluntary provision of public goods and income tax evasion under
the assumption that individuals are ruled by a notion of Kantian
morality. Our justification for imposing such an assumption is
that models incorporating the traditional assumption of rational
egoism are unable to explain the
many real world examples of
successful private provision of public goods, of which compliance
to tax rules can be taken as an example. In the first part of this
work, after having reviewed the literature on private provision of
public goods and justified our alternative approach, we introduce
and formalize the notion of Kantian behaviour. We investigate
efficiency of private provision of public goods under Kantian
behaviour and we also compare Kantian provision with alternative
models of public goods supply. Precise conditions on the structure
of individual preferences which would ensure efficiency of private
provision of a public good under Kantian, behaviour are derived. It
is also shown that while Kantian supply of a public good is in
general, still characterized by, underprovision it tends to be more
efficient than public good provision under a democratic system as
represented by the Median voter. theorem. Finally, using the notion
of Lindahl equilibrium, a different way of assessing under/over
provision of a public good under Kantian behaviour is derived. In
the second part of this work, building upon the analysis on
Kantian behaviour developed in the previous sections, we address
the phenomenon of income tax evasion as an example of voluntary
(non) provision of a public good. We present a model where the
amount of tax that a taxpayer wishes to evade is determined on the
basis of his perception of the fairness of his fiscal treatment,
with respect to both governmental supply of public goods and the
perceived behaviour of the other taxpayers. The coercive powers of
the state, as well as the taxpayer's attitude toward risk,
determine only the extent, to which this desired level of tax
evasion is reached in practice. It is shown that this approach is
able to produce implications for the relationship between the
characteristics of public expenditure, the tax rates and tax
evasion which are more consistent with both intuition, and
empirical evidence than the results of the conventional model of
income tax evasion. Furthermore, it also allows one to address
other important questions such as the effect of government
X-inefficiency on tax evasion.

Item Type:	Thesis or Dissertation (PhD)
Subjects:	H Social Sciences > HB Economic Theory
Library of Congress Subject Headings (LCSH):	Public goods, Voluntarism, Tax evasion, Professional ethics
Official Date:	December 1989
Dates:	Date Event December 1989 Submitted
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Extent:	2 v. (275 leaves)
Language:	eng

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