A brief note on a non-existent theorem about the optimality of uniform taxation

This note attempts to clarify the relationship between the separability of utility into goods and leisure and the question of whether uniform commodity taxes are optimal. The failure of several authors to recognize subtle differences in assumptions has caused confusion.     

Externalities and optimal taxation

This paper reexamines the optimal tax design problem (income and commodities) in the presence of externalities. The nature of the second–best, and the choice of the tax instruments, are motivated by the informational structure in the economy. The main results are: (i) environmental levies (linear or nonlinear) differ in formula from Pigouvian taxes by the expressions for the optimal tax on private goods; (ii) externalities do not affect commodity tax formulas (linear and nonlinear) for private goods; (iii) externalities do not affect the income tax structure if commodity taxes are nonlinear and affect it if commodity taxes are linear; and (iv) a general income tax plus strictly Pigouvian taxes are sufficient for efficient taxation if individuals of different types have identical marginal rates of substitution (at any given consumption bundle).     

论传统外部性理论解决环境代际外部性的失效

代际外部性问题主要是人类代际之间行为的相互影响,尤其是前代对后代、当代对后代的影响。在解决代际外部性上,施害者、受害者和政府生活在不同的时空中,新古典方法几乎就无能为力。产权的界定是在产权主体存在的前提下进行的,所以产权在代际进行界定是不可能实现的,所以通过科斯定理来消除代际的外部性也行不通。     

A note on the fundamental theorem of exact aggregation

If individual i's demands for a commodity are a function of prices, p, income M_i and a vector of attributes A_i, then aggregate demand is

This paper derives the necessary and sufficient conditions of f_i, F and a system of functions g_k(M₁,…,M_N,A₁,…,A_N) symmetric in the M's and A's such that F can be written in the form F(p, g, (M₁,…,M_n,A₁,…,A_N),…, g_n(M₁,…,M_n,A₁,… ,A_n)) for all values of its arguments.     

A general-equilibrium re-appraisal of the Stolper-Samuelson theorem

This paper conducts a general-equilibrium analysis of the Heckscher-Ohlin model in which product price is endogenized. It applies both marginal and infra-marginal comparative-static analyses to examine the co-movement of factor and product prices. It shows that the Stolper-Samuelson theorem's prediction does not always hold, in particular, it does not always hold inside the diversification cone when changes in production parameters lead to changes in prices; or when the general equilibrium jumps from one structure to another. The result of this paper supports the everything-possible theorem and casts doubt on the general applicability of other core trade theorems derived from the same framework as the Stolper-Samuelson theorem.     

Commodity taxation and imperfect competition : A note on the effects of entry

This paper looks at the effects of allowing the number of firms to vary in Seade's model of oligopoly and taxation. We show that the normative and positive consequences of a specific commodity tax are affected by entry in significant ways.     

A note on corporate taxation,limited liability,and asymmetric information

Becker and Fuest (this issue, p. 1–10) provides a new explanation for the link between limited liability and corporate taxation. The authors argue that a corporate tax on all entrepreneurs with limited liability is optimal when entrepreneurs can offset potential losses and when asymmetric information exists regarding projects’ qualities. This note considers a model with a slightly modified production technology. It confirms that entrepreneurs’ abilities to offset losses and the existence of asymmetric information may affect government policy. However, it also shows that the optimal taxation policy differs from that suggested by Becker and Fuest.      

A general impossibility result on strategy-proof social choice hyperfunctions

A social choice hyperfunction picks a non-empty set of alternatives at each admissible preference profile over sets of alternatives. We analyze the manipulability of social choice hyperfunctions. We identify a domain D^λ of lexicographic orderings which exhibits an impossibility of the Gibbard–Satterthwaite type. Moreover, this impossibility is inherited by all well-known superdomains of D^λ. As most of the standard extension axioms induce superdomains of D^λ while social choice correspondences are particular social choice hyperfunctions, we are able to generalize many impossibility results in the literature.     

A bibliographical note on a theorem of Hardy,Littlewood, and Polya

A well-known theorem of Hardy Littlewood and Polya together with its more recent generalizations is stated here. Some of these results were applied recently in the economic literature. The economic interpretation of the mathematical theorems is mentioned and references are included.     

Costly enforcement of property rights and the Coase theorem

We examine a setting in which property rights are initially ambiguously defined. Whether the parties go to court to remove the ambiguity or bargain and settle before or after trial, they incur enforcement costs. When the parties bargain, a version of the Coase theorem holds. However, despite the additional costs of going to court, other ex-post inefficiencies, and the absence of incomplete information, going to court may ex-ante Pareto dominate settling out of court. This is especially true in dynamic settings, where obtaining a court decision today saves on future enforcement costs. When the parties do not negotiate and go to court, a simple rule for the initial ambiguous assignment of property rights maximizes net surplus. A paper circulated under the same title and dated 6 March 2000 contained the basic structure examined in this paper, but did not develop many of the results reported here. For comments, we would like to thank participants at the WZB-CEPR contests conference and seminar audiences at the University of Southern California, the University of British Columbia, UC Davis, and UC Riverside.     

Escalating penalties for repeat offenders: a note on the role of information

The severity of the sanction for a given offense is often determined by the offense history of the offender. We establish that this policy can be welfare-maximizing if individuals are imperfectly informed about the magnitude of the sanction. Imperfect information distorts individuals’ perception of the expected sanction of the first offense. Once detected, individuals learn about the sanction applicable to their act, making this argument less relevant for consecutive offenses.      

(Non)optimality of the Friedman rule and optimal taxation in a growing economy with imperfect competition

This paper shows that if capital generates production externality, there exists a wedge between returns to money and to capital, driving the Friedman rule is not optimal. However, in the absence of capital externality, the Friedman rule may be valid even under imperfect competition.     

A note on the diffusion of innovation

The paper deals with the process of substitution between technologies in a framework of increasing returns to scale. The approach stresses the interaction between capacity expansion and market demand as explanations of the diffusion of technologies into their niches. The demand and supply sides of the diffusion process are therefore brought together to determine simultaneously patterns of output and prices.It analyzes the dynamics of the substitution path, where a logistic diffusion process for the new technology is assumed, and determines the substitution curve between the old technology and the new one.     

A note on the pricing of IPOs

This paper studies the pricing of IPOs in a tractable model in which an investment bank faces some investors with superior information. We show how this can lead to underpricing and we make a number of empirical predictions.     

The limit theorem on the core of a production economy in vector lattices with unordered preferences

Summary. We prove Aliprantis, Brown, and Burkinshaw's (1987) theorem on the equivalence of Edgeworth production equilibria and pseudo-equilibria in a more general setting. We consider production economies with unordered preferences and general consumption sets in a vector lattice commodity space. We adapt the approach of Mas-Colell and Richard (1991) and prove our theorem by applying a separating hyperplane argument in the space of all allocations. We also generalize Podczeck's (1996) important result on the relationship between continuous and discontinuous equilibrium prices to the case of production. Received: April 18, 1997; revised version: February 6, 1998     

Taxesversus tradable discharge permits: A review in the light of the U.S. and European experience

The U.S. and West European environmental protection programs have incorporated different economic instruments for controlling pollution. The U.S. has made extensive use of tradable permits of several forms but has never used direct pollution taxes. The countries of the European Community have long used an array of pollution taxes but have never used tradable permits. A review and critique of these experiences and an analysis of the attributes of taxes and tradable permits seeks identify the strengths and weaknesses of each instrument and to provide guidelines for the successful implementation of each system.