Existing models of hospital financing advocate mixed schemes which include both lump-sum and cost-based payments. The doctor is generally the unique decision maker, which is unrealistic in a hospital setting where both managers and doctors are involved. This paper develops a model in which...

The literature on the use of differential commodity taxes/subsidies and that on quantity controls to supplement income taxation have developed separately from each other. The purpose of this paper is to combine these two strands in the standard framework of optimal non-linear income taxation. We...