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  • THE MARGINAL COST OF PUBLIC FUNDS
    THE MARGINAL COST OF PUBLIC FUNDS
    JOHANSSON, P. / KRISTRÖM, B.
    In a perfect market economy, the cost of raising another euro of tax revenue equals one. However, once distortionary taxes on goods and factors are introduced, the marginal cost of public funds, MCPF, typically deviates from one. Often it exceeds one, but one can also find cases where it falls short of one. This Element introduces the concept of the MCPF, sketches its history, ...
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