On Wed, 28 Aug 2002, Fred Foldvary wrote: > Is that not an integral part of the demand revealing process? > To get one's net value, we need to know the cost he will pay, and that cost > is the average cost.
Tideman/Tullock 1976. They begin the exposition of the demand revealing process with individuals being assigned arbitrary cost shares. These could be average program costs or could be proportionate to tax shares in the current system -- the demand revealing process works regardless of the taxation mechanism chosen to fund the public good. Later, they play with estimating Lindahl taxes, but clearly those wouldn't be average costs either. > But if the tax payment includes all the social cost, and value is revealed in > the willingness to pay the opportunity cost (sacrifice of resources), why > would the benefits be lower than the social cost? The value of the item > would include that due to expression. The tax payment extracted in the running of the demand revealing process is intended only to induce truthful preference revelation, not to fund the chosen program. Indeed, extracted funds are to be wasted rather than used to fund the project. Tideman/Tullock also note in their section on Lindahl taxes that information gathered in the demand revealing process cannot be used for setting Lindahl tax shares as this would induce people to lie about their valuations in order to reduce their tax shares. Lindahl taxation is as difficult under the demand revealing process as under any other social choice mechanism. So, nothing specifies that tax payments approximate social costs, whether instrumental or expressive voting is assumed. Eric Crampton > > Fred Foldvary > > ===== > [EMAIL PROTECTED] > >
