User pays


User pays, or beneficiary pays, is a pricing approach based on the idea that the most efficient allocation of resources occurs when consumers pay the full cost of the goods that they consume. In public finance it stands in opposition to another principle of "ability-to-pay," which states that those who have the means should share more of the burden of public services. The ability-to-pay principle is one of the reasons for the general acceptance of the progressive income tax system.

The principle of user pays supports the idea of horizontal equity, which states that those in similar wealth and income positions should be treated equally by the tax system. The basic idea is that those who do not use a service should not be obligated to pay for it. As long as the beneficiary aligns exactly with the user, the user-pays principle works. Those who do not go to a movie are not obligated to pay for someone else to attend.

In public goods, beneficiaries and users sometimes do not align. The divergence of user and beneficiary occurs when production and consumption have external effects. Driver who purchase gasoline may believe that they pay for the full cost (user-pays) of using gasoline except for the greenhouse gases produced. They impose costs on the environment and are known to contribute to climate change. The "beneficiaries" must bear costs not paid in the purchase of gasoline. In that case the user-pays principle results in the driver not paying the full or social cost of using fossil fuels, which creates a strong argument for regulation and other forms of public intervention. Increasing taxes on gasoline is one possible response that preserves the user-pays principle by increasing the costs to user.

However, such analysis is often complicated by the lack of knowledge that would inform regulators of the efficient level of gas use and the costs of emissions.








Categories: Pricing




Information as of: 20.06.2021 05:22:47 CEST

Source: Wikipedia (Authors [History])    License : CC-BY-SA-3.0

Changes: All pictures and most design elements which are related to those, were removed. Some Icons were replaced by FontAwesome-Icons. Some templates were removed (like “article needs expansion) or assigned (like “hatnotes”). CSS classes were either removed or harmonized.
Wikipedia specific links which do not lead to an article or category (like “Redlinks”, “links to the edit page”, “links to portals”) were removed. Every external link has an additional FontAwesome-Icon. Beside some small changes of design, media-container, maps, navigation-boxes, spoken versions and Geo-microformats were removed.

Please note: Because the given content is automatically taken from Wikipedia at the given point of time, a manual verification was and is not possible. Therefore LinkFang.org does not guarantee the accuracy and actuality of the acquired content. If there is an Information which is wrong at the moment or has an inaccurate display please feel free to contact us: email.
See also: Legal Notice & Privacy policy.