The Atkinson-Stiglitz Theorem and its extensions have been interpreted as implying that capital income should not be taxed. If, as seems reasonable on empirical grounds, we introduce production of household goods with close market substitutes, this conclusion no longer holds. We analyse optimal...

The process of industrialization was accompanied by the switch from household production to firm production. The industrialization process was also a process of population growth, the appearance of general-purpose technologies, and the expansion of international trade. This paper studies the...