A simple benchmark case is established to derive the optimum commodity tax on an externality-generating good that may be purchased abroad directly by domestic consumers. As the tax should under-cut the Pigovian level, this simple case supports the intuition that taxes should be moderated when...

The paper discusses which distributional policies are efficient when the identity of the high and low skill persons is private information. Our major purpose is to identify the more efficient policy when, presumably for administrative reasons, the policy option is confined to the choice between...

A simple benchmark case is established to derive the optimum commodity tax on an externality-generating good that may be purchased abroad directly by domestic consumers. As the tax should under-cut the Pigovian level, this simple case supports the intuition that taxes should be moderated when...