Munk, Knud Jørgen - School of Economics and Management, University of Aarhus - 2006
qi u
Max u
∈
s.t.
,
(19)
()0Eu=q,
x
⎞
⎟
FC
(,) 0
ii
i
tE u G
∈
−=
∑
q
The corresponding Lagrangian expression is …
=
∑
q+ = 0 h∈H (21)
(,) (,) (,)
kiikk
iFC
k
Eu tEuEu
q
μ
∈
∂ ⎛⎞
=− +λ +
⎜⎟
∂
⎝⎠
∑
qq
L
q=0, (22) kFC∈
From (21) we …+N
( ,..., )
hh k
xx≡x ()
hh
=−c ω
The government can levy commodity taxes,
( )
1MN
t ,...,t
+
≡t . The rates of tax on the value …