Two essays in public economics

In the first essay, the preferential tax treatment enjoyed by nonprofit organizations is examined; in particular, their exemption from the corporate income tax. A small-scale computational general equilibrium model is constructed, and differential analysis is performed to determine: (a) the size of the efficiency cost of exempting nonprofit firms from the corporate income tax, and (b) the sensitivity of the estimate to assumptions made about nonprofit behavior.;The results indicate that assumptions made about nonprofit behavior have an important effect on the simulated efficiency cost of the corporate-income-tax exemption. When all of nonprofit output is specified as a private good, the excess burden estimates are significant, including in the context of an additional distortion from the individual deduction for charitable donations. When nonprofit charitable output is viewed as a pure public good, the corporate-income-tax exemption is significantly welfare improving, as would any favorable treatment of nonprofits in this type of model.;In the second essay, Wicksell's contribution to the development of modern public economics is addressed. Wicksell's public economics is subject to numerous and varying interpretations. The substantive points of disagreement in interpretation highlight the central controversies of public economics, including the nature of public goods and the importance and role of Pareto efficiency. In this essay, the leading interpretations of Wicksell by Buchanan, Musgrave, and Samuelson are examined. Each interpretation is deconstructed and compared to the others to identify substantive points of contention and commonality. Additional interpretations found in the history-of-thought literature and the public-economics literature are also examined.;In identifying the multiple interpretations of Wicksell, an attempt is made to isolate the normative and legitimizing facets from the explanatory facets of each interpretation. The causes for the multiplicity of interpretations are identified, concentrating on the explanatory factors of the difficulty of Wicksell's subject matter and the role of ideology. An examination of the writings on Wicksell's public finance reveals a narrowing of interpretation as Buchanan's has come to dominate the discussion. Several reasons for this are explored, including his "first" use of Wicksell, the use of Wicksell in his writings and by his students, and the sense that his interpretation is ideologically congenial within the scope of conservative neoclassical economics. Fourth, various methods of determining Wicksell's status in public economics are examined.