In this paper we address the following four questions: is it reasonably correct to assume that the government is benevolent and competent? Has state intervention through taxation and transfers negative effects on individual incentives? In a context of limited information, are political failures...

The paper characterizes the optimal tax policy and the optimal quality of day care services in a OLG model with warm-glow altruism where parental choices over child care arrangements affect the probability that the child becomes a high-skilled adult in a type-speciffc way. With respect to...

In a pharmaceutical Reference Price Scheme (RPS), firms are free to set their prices, but the (insured) consumer pays only the difference between the Reference level (R) and the actual price of the drug, if this is higher than R. By introducing n ( 1) firms with in nite cross-price elasticity...

The paper provides the axiomatic characterization of a new poverty measure, the path-dependent poverty index. This is a two period index taking into account not only individuals current and past deprivation levels, but also the relative position with respect to their previous income status....

When accidental bequests signal otherwise unobservable individual characteristics such as productivity and longevity, the tax administration should partition the populationinto two groups: One consisting of people who do not receive an inheritance and the other of those who do. The first tagged...

Previous literature has shown that public provision of private goods can be a welfare-enhancing device in second-best settings where governments pursue redistributive goals.However, three issues have so far been neglected. First, the case for supplementing an optimal nonlinear income tax with...