A dynamic equilibrium model of an economy with underground trade is developed in which agents devote effort to search, building up networks of underground contacts. The model is used to illustrate dynamic responses to tax increases. The model is shown to be consistent with the stylized fact that...

Many public goods generate utility only when combined with a time-input. Important examples include road networks and publicly provided leisure facilities. If it is possible to charge for the time spent using the public good it is generally a second-best Pareto optimal policy to do so even in...