Rent Seeking in Public Procurement

2005

Poverty, taxation and governance

2006

In a simple model based on political support approach, we show that poor and less egalitarian societies may impose a lower tax rate contrary to the prediction of the median voter approach. This is consistent with the available empirical findings. In the framework developed in this paper, the government can strategically design a weak governance system to promote informal activities for the poor. This constitutes an alternative redistributive strategy other than the standard tax-transfer policy. The government chooses the tax rate and the degree of governance simultaneously to maximize the average income of the poor in the informal sector of the economy, i.e. those who constitute the majorit…

The Taxation of Financial Capital Under Asymmetric Information and the Tax-Competition Paradox

2003

Information sharing between governments is examined in an optimal-taxation framework. We introduce a taxonomy of alternative systems of international capital-income taxation and characterize the choice of tax rates and information exchange. The model reproduces the conclusion found in earlier literature that integration of international caopital markets may lead to the under-provision of publicly provided goods. However, in contrast to previous results in the literature, under-provision occurs due to inefficiently coordinated expectations. We show that there exists a second equilibrium with an efficient level of public-good provision as well as complete and voluntary information exchange be…

Contests with size effects

2006

In this paper we analyze the structure of contest equilibria with a variable number of individuals. First we analyze a situation where the total prize depends on the number of agents and where every single agent faces opportunity costs of investing in the contest. Second we analyze a situation where the agents face a trade-off between productive and appropriative investments. Here, the number of agents may also influence the productivity of productive investments. It turns out that both types of contests may lead to opposing results concerning the optimal number of individuals depending on the strength of size effects. Whereas in the former case individual utility is u-shaped when the numbe…

The contribution of Herschel I. Grossman to political economy

2005

Herschel Grossman was one of the most creative and productive economists of his generation in the field of political economy. This paper surveys his scientific contributions to the field.