There still seems to be some confusion about the consequences of normalisations in the optimal taxation litterature. We claim that: 1) Normalisations do not matter for the real solution of optimal taxation problem. 2) Normalisations do matter for good characterisations of the solutions to...

Many economic models and optimization problems generate (endogenous) shadow prices - alias dual variables or Lagrange multipliers. Frequently the “slopes” of resulting price curves - that is, multiplier derivatives - are of great interest. These objects relate to the Jacobian of the...