This paper examines the extent to which a democratic society characterized by an unequal distribution of income, is capable of transforming potential efficiency gains into actual economy-wide welfare gains. The model emphasizes the distortive effects of these potential efficiency gains on the...

How can we reconcile recent theories predicting that the U.S. tax system should be sharply progressive [see for example Cukierman and Meltzer (1991)], with decades of empirical studies showing that the U.S. tax system is actually roughly proportional? I start by showing that cross-sectional data...

We analyze the problem of economic integration using a cooperative approach. By explicitly introducing time as an endogenous variable, we make sharp predictions about the timing of admission to coalitions, about the equilibrium coalition structure, about the equilibrium payoff distribution, as...