income in the considered economy: If (1) the price is low, everyone buys the good; if (2) the price is high, only the rich …

-seeking preferences justify heavier taxation of income because this serves to internalise the negative externality that the pursuit of … status imposes on others. In a model where status depends on both income and effort, we show that the optimal corrective tax … function in such a model, and discuss potential implications for optimal income taxation. …