--- Eric Crampton <[EMAIL PROTECTED]> wrote: > 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.
Yes, but an essential element is that each individual be assigned a specific cost share, in dollars, so that he knows ahead of stating a value what it will cost. That is Hal Varian's explanation in * Intermediate Microeconomics * . > 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. The Clarke tax is thusly used. But the cost share assigned to a participant should fund the project. > So, nothing specifies that tax > payments approximate social costs, whether instrumental or expressive > voting is assumed. The cost of the item should be paid by the assigned tax shares of the participants. Otherwise indeed it makes no sense. The method as stated by Varian is: 1) Assigen a cost c(i) to each agent i. He will pay this if the item is obtained. 2) Have each agent state a value s(i). The net value n(i) is the stated value minus the cost c(i). 3) If the sum of the stated values exceeds the total cost C, the item is obtained. 4) The decisive (pivotal) agents pay the social cost (Clarke tax) equal to the sum of the net values (all n(i)) other than that of the pivotal agent. Note that it is essential for each agent to be assigned a cost c(i). Fred Foldvary ===== [EMAIL PROTECTED]
