In several recent initial public offerings in privatization cases shares seemed to be severely underpriced. In this paper we provide a political economy explanation for this apparent underpricing. Using a variant of Grossmann and Helpmann's (1996) model of special interest politics, we...

In this paper we use a simple median voter model to analyze the effects of tax systems with differing degrees of progressivity. We find that relatively high taxes on middle incomes have two important advantages: on the one hand, they help to ensure that all citizens are better off than they...