We consider a model with labor market frictions and monopolistic competition in the goods market. We introduce proportional income taxation and unemployment benefits with Government balanced budget constraint. We evaluate the effects of both more competition and higher unemployment benefits. We...

We examine how tax cuts that benefit some firms are related to the economic performance of their direct competitors. Consistent with tax cuts decreasing the cost of initiating competitive strategies, we find that a decrease in the tax burden for only a certain group of firms in the U.S. economy...