Roy D. Adams

Private Goods, Club Goods, And Public Goods As A Continuum ∗

A recent paper in this review [Cowen, 1985] examined the commonly used distinction between private and public goods and services, whereby private goods are said to be both rival in consumption and excludable from non-payers, while public goods are non-rival and non? excludable. In that paper Cowen correctly pointed out that such a dichotomous distinction is woefully inadequate in categorizing real world phenomena, particularly when one considers such things as the number of consumers, the location of the good, and the institutional manner of provision. However, contrary to what Cowen implied, the real problem does not lie with the concepts of rivalry and excludability (or public and private goods) per se. Instead, the difficulties he described stem from a failure to recognize that: (1) these characteristics are actually matters of degree, and (2) rivalry and excludability in consumption are in fact distinct and independent characteristics. Thus, a classification system which separates these features and allows them to be present in varying degrees is required. The purpose of this paper is to present such an expanded system of classification; this improved taxonomy resolves the problems posed by Cowen.

The Effect of Income Tax Progressivity on Valuations of Income Streams by Individuals

The effect of taxes upon investment patterns in agriculture is an important policy consideration that has received attention in past issues of this Journal. However, some authors have inadequately adjusted income-stream valuation formulas for the effect of the individual income tax and have consequently reached incorrect conclusions regarding both the present value of future income and the effect of income tax progressivity on the relative valuations of individuals in different tax brackets. Rodewald

The Traditional Distinction between Public and Private Goods Needs to Be Expanded, Not Abandoned

Observations that goods and services cannot legitimately be divided into just two categories - private and public - have led to a proposal, published in this journal, that the traditional concept of public goods be abandoned. In this paper it is suggested that the problems of the private versus public dichotomy be solved by expanding the taxonomy, not by abandoning it. Non-rivalry and non-excludability are independent characteristics (i.e. one can exist without the other), and they can be present in varying degrees (i.e. they are not all-or-nothing characteristics). Recognizing this, an expanded taxonomy is constructed which is not subject to the valid criticisms which have been made of the too simple private versus public dichotomy.

Tax Rates and Tax Collections: The Basic Analytics of Khaldun-Laffer Curves

This article describes the relation between tax rates and tax collections for three different types of taxes: unit excises, ad valorem excises, and general income taxes. The tax rate-tax collections relationship is currently the subject of widespread discussion, but the determinants of the shape of the function have not been clearly specified. This article presents mathematical and graphical expositions of the linkage between supply and demand for taxed commodities and the tax rate-tax collections relationship. The tax collections function will often, but not always, be shaped as it is commonly drawn; its shape is uniquely determined by the underlying supply and demand functions in the taxed market. Whether a tax rate change will increase or reduce tax collections is always an empirical issue which depends on the values of items identified by the theoretical analysis in this article.

Book Review : Supply-Side Economics: A Critical Appraisal. Edited by Richard H. Fink. Frederick, MD: University Publications of America, 1982. Pp. xxiv, 488

The principal recurring theme of supply-side economics is that high marginal tax rates significantly reduce incentives to work, save, invest, and take risks, especially in the taxed (above-ground) sectors of the economy. Other themes include Say’s law, an almost emotional rejection (but not refutation) of Keynesian economics, and a strong attraction to the gold standard. The common denominator is opposition to more than quite minimal government involvement in the economy; from tax rates and spending levels to demand management and control of the money supply, for supply-siders the best government seems to be