Jump to ContentJump to Main Navigation
Applied Welfare Economics$
Users without a subscription are not able to see the full content.

Chris Jones

Print publication date: 2005

Print ISBN-13: 9780199281978

Published to Oxford Scholarship Online: July 2005

DOI: 10.1093/0199281971.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 January 2021

Revised Shadow Prices

Revised Shadow Prices

(p.139) 6 Revised Shadow Prices
Applied Welfare Economics

Chris Jones (Contributor Webpage)

Oxford University Press

Governments rarely raise revenue with lump sum transfers. Instead, they use distorting taxes, and this must be reflected in cost-benefit studies. The conventional welfare analysis in previous chapters is revised to include changes in tax inefficiency when distorting taxes are used to balance the government budget. This involves a simple revision to the conventional (lump sum) shadow prices, in which the revised shadow price of any good is its conventional shadow price plus the change in tax inefficiency on the revenue transfers made with distorting taxes. This adjustment is used in the next chapter to demonstrate the role played by the marginal social cost of public funds (MCF) in project evaluation. Finally, the Hatta (1977) decomposition is extended to revised shadow prices where the income effects are isolated in the revised shadow value of government revenue. It is used in following chapters to measure the distributional effects of policy changes when governments make revenue transfers with distorting taxes.

Keywords:   compensating transfers, marginal excess burden of taxation, revenue transfers, revised shadow prices, revised shadow value of government revenue, tax inefficiency

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .