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We study the dynamic taxation of capital and labor in the Ramsey model under the assumption that taxes and public good provision are decided by a self-interested politician who cannot commit to policies. We show that, as long as the discount factor of the politician is equal to or greater than...
Persistent link: https://www.econbiz.de/10013156673
When comparing marginal costs and benefits of a public project, most economists think in terms of adding together the marginal costs of production plus marginal costs of additional distortionary taxation. This paper clarifies how the "revenue effect" offsets the "distortionary effect." For...
Persistent link: https://www.econbiz.de/10013249247
This paper illustrates how one can use causal effects of a policy change to measure its welfare impact without decomposing them into income and substitution effects. Often, a single causal effect suffices: the impact on government revenue. Because these responses vary with the policy in...
Persistent link: https://www.econbiz.de/10013079752
The current debate in Western Europe centers on the relationship between economic and political integration. To address this problem, we construct a simple general equilibrium model in which the returns to trading are directly affected by the availability of a public good. In our model,...
Persistent link: https://www.econbiz.de/10013138063
Households "sort" across neighborhoods according to their wealth and their preferences for public goods, social characteristics, and commuting opportunities. The aggregation of these individual choices in markets and in other institutions influences the supply of amenities and local public...
Persistent link: https://www.econbiz.de/10013138319
We analyze a seldom used, but highly promising form of rights-based management over common pool resources that involves the self-selection of heterogeneous fishermen into sectors. The fishery management regime assigns one portion of an overall catch quota to a voluntary cooperative, with the...
Persistent link: https://www.econbiz.de/10013138469
We examine the welfare effects of provision of local public goods in an empirically relevant setting using a multi-community model with mobile and heterogeneous households, and with flexible housing supplies. We characterize the first-best allocation and show efficiency can be implemented with...
Persistent link: https://www.econbiz.de/10013121991
Recent policy proposals have suggested taxing top incomes at very high rates on the grounds that some or all of the highest wage earners are engaged in socially unproductive or counterproductive activities, such as externality imposing speculation in the financial sector. To address this, we...
Persistent link: https://www.econbiz.de/10013125562
This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism, to deter free riding and improve group welfare....
Persistent link: https://www.econbiz.de/10013125564
We present and experimentally test a mechanism that provides a simple, natural, low cost, and realistic solution to the problem of compliance with socially determined efficient actions, such as contributing to a public good. We note that small self-governing organizations often place enforcement...
Persistent link: https://www.econbiz.de/10013125568