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The flypaper effect revisited

Aragon, Fernando (2009) The flypaper effect revisited. Economic Organisation and Public Policy Discussion Papers, EOPP 004. The London School of Economics and Political Science, Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Identification Number: EOPP 004

Abstract

This paper argues that there is nothing anomalous about the flypaper effect. I develop a simple median voter model of government spending with costly tax collection that predicts the flypaper effect and provide a quantifiable measure of its magnitude. Using the model insights and previous estimates, I show that a tax rate between 8% to 16% would account for the flypaper effect observed in U.S. subnational governments.

Item Type: Monograph (Report)
Official URL: http://sticerd.lse.ac.uk/
Additional Information: © 2009 The Author
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
Sets: Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 24 Jul 2014 09:02
Last Modified: 24 Jul 2014 09:02
URI: http://eprints.lse.ac.uk/id/eprint/58199

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