The assessment that the implementation of efficient outcomes by means of decentralized spontaneous solutions is to be expected for private goods, but not for public goods has become part of the conventional wisdom of our discipline. This paper uses a mechanism design approach to clarify under...

We study the impact of a nancial transactions tax on a market where financial institutions trade with each other. There are two main results: First, if all banks can honor their short-term obligations, a financial transactions tax is entirely neutral. Second, in a model with correlated...