Switching costs can prevent products that would be socially beneficial from being produced. We construct a model in which the switching cost takes the form of an investment required to manufacture a new form of an existing product. Given the cost, it is privately rational for producers not to...

The marginal cost of public funds (MCF) measures the cost to the economy of raising government revenue. The MCF can be used to guide reform of the tax system and to determine an efficient level of government expenditure. It can also be used as an input into cost-benefit analysis. Previous...