Separability and public finance

Stéphane Gauthier (1) , Guy Laroque (2, 3)

1 CREST - Centre de Recherche en Économie et Statistique
2 IFS - Laboratory of the Institute for Fiscal Studies
3 Department of Economics

In a second best environment, the optimal policy choice sometimes follows first best rules, as described in a number of scattered works. This paper presents a formal general argument which allows to unify much of the literature. It lays down the information structure and separability assumptions under which the results hold in a variety of setups, with extensions to preference heterogeneity and individual production sets

Mots clés: separability; second best optimality; indirect taxes; Samuelson rule; Pigovian taxation; individual production

Domaines: Economies et finances

Stéphane Gauthier, Guy Laroque. Separability and public finance. Journal of Public Economics, 2009, 93 (11-12), pp.1168-1174. ⟨10.1016/j.jpubeco.2009.09.003⟩. ⟨hal-00731132⟩