Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Nov, 1970, Volume 38, Issue 6

Public Goods and Income Distribution<907:PGAID>2.0.CO;2-4
p. 907-920

Henry Aaron, Martin McGuire

Hitherto, studies of the impact of government taxation and expenditure on the distribution of national income or product among income classes have used arbitrary rules of thumb for the distribution of the benefits from pure public goods or bads. This article demonstrates the logically correct method for distribution of these public good benefits. Application of this method requires information on consumer preferences for public goods; since this information is unavailable, we illustrate the application of the method to the 1961 United States income distribution by showing how various distributions would result from various consumer preference structures.

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