Marginal tax reform, externalities and income distribution.

The paper examines welfare improving and revenue neutral directions marginal policy reforms for an economy with nonidentical individuals and an externality that has a feedback effect on the consumption of taxed goods. It considers three types of policy instruments: the indirect taxes, the uniform poll transfer and public abatement. This extends the framework set up by Ahmad and Stern (1984), Bovenberg and de Mooij (1994) and Schöb (1996). The theoretical model is illustrated for a specific externality, namely congestion caused by peak car transport.

Capital-Intensive Projects Induce More Effort Than Labor-Intensive Projects

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials--a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.Federalism; Capital subsidies; Transit subsidies

The political economy of fixed regional investment shares with an illustration for Belgian railway investments.

Many local public goods are allocated by federal governments using fixed regional shares: every region is entitled a fixed share of the total budget for a particular type of public good. This paper compares this fixed regional sharing rule with two alternative allocation rules: first best and common pool allocation. We find that the fixed regional sharing rule performs relatively well if the regional shares are reasonable. Legislative bargaining theory is used to study the determination of the fixed regional shares.

Urban Transport Pricing Reform With Two Levels Of Government

This paper analyses two challenges in the reform of urban transport pricing. The first challenge is the construction of an optimal package of urban transport pricing instruments assuming one benevolent government level that maximizes overall welfare. We examine the welfare gains from implementing in succession better parking prices, improved public transport prices and time varying tolling. It is found that parking and tolling are the most important elements of the optimal package and that the alternative policy instruments are sub-additive in their benefits. The second problem studied is the use of these pricing instruments by different government levels. We examine a case where an urban government controls parking fees and the regional government controls the tolling. Although both government levels have different objective functions, we find that the overall efficiency losses in the Nash and Stackelberg equilibria are limited.

Inefficiencies in regional commuting policy.

This paper discusses investments in transport infrastructure and incentives for commuting taxes in a multiregional setting. We study the horizontal and vertical interactions between governments. We identify incentives for strategic and tax exporting behavior that might lead to underinvestment in transport infrastructure. Furthermore, we show that the intensity of the strategic behavior is affected by geographic firm ownership structure, the number of labor-supplying regions and the revenue-sharing mechanism in the federation. A numerical example applies the insights on commuting in Belgium.

Reducing rent seeking by providing wide public service

A winning coalition which sets policy cannot always ensure that members of the coalition will be the ones getting benefits. Different jurisdictions (including members of the winning coalition) may then engage in costly rent seeking. Maximizing the welfare of the winning coalition may therefore require providing services to jurisdictions which are not members of the winning coalition, thereby reducing rent seeking by members of the winning coalition. The paper shows how this mechanism can generate insuffcient supply of public services, and offers another explanation for the use of co-funding requirements by the central government.

Towards better transport pricing and taxation in Belgium

Starting from the fundamental principles of transport pricing the paper discusses the relative merits of a number of policy measures. It is argued that in the short to medium run the discouragement of the purchase of new diesel cars is the most important environmental measure that can be taken. A further increase in the fuel efficiency is no priority. In the same time frame parking charges and a cordon toll around major cities have an important role to play, while subsidies to public transport are justified only if a number of conditions are met. A toll on trucks is mainly an interesting way to make transit traffic pay taxes, but could be less useful to control the congestion levels. In the long run prices should be based on marginal social costs. Such pricing measures should be accompanied by a well-directed use of the revenues to correct for the effects on the poorest income groups.Transport Pricing, transport taxes, transport externalities

Capital-intensive projects induce more effort than labor-intensive projects

Central governments often subsidize capital spending by local governments, instead of subsidizing operating expenses or labor-intensive projects. This paper offers one explanation, focusing on the incentive effects for local officials. a local official can more easily shift the cost of optimizing a project to his successor on a labor-intensive project than on a capital-intensive project.

The cost effectiveness of environmental policy instruments in the presence of imperfect compliance.

We aim to integrate information, monitoring and enforcement costs into the choice of environmental policy instruments. We use a static partial equilibrium framework to study different combinations of regulatory instruments (taxes, standards…) and enforcement instruments (criminal fine, administrative fine…). The firms’ compliance decisions depend on the instrument combination selected by the government. The model is used to compare the welfare effects of different instrument combinations for the textile industry in Flanders. We find that administrative, implementation, enforcement and monitoring costs are important to decide on the necessity of an environmental policy. Moreover, we show that emission taxes are not necessarily the most cost-effective instrument. This result holds even if we include industry heterogeneity. The decision of whether to pursue an environmental policy or not depends crucially on the formulation of an appropriate monitoring and enforcement policyK32 Environmental Law; K42 Illegal behaviour and enforcement of law; Q28 Government policy;

Can we use transport accounts for pricing policy and distributional analysis?.

Policy; Pricing; Pricing policies; Transport; Working;