Journal of Public Economic Theory最新文献

This paper introduces a model where a briber designs a bribing schedule targeted at the governing party within a bipartisan system to secure favorable treatment. Detected corruption increases voters' resentment, and in turn, the risk of political turnover—raising the minimum acceptable bribe. Periods without corruption mitigate such a risk. Should the briber deem bribing unprofitable for sufficiently high levels of resentment, resentment converges to a steady state in finite time. Conversely, if the briber perceives bribing as profitable regardless of the resentment level, the dynamics may result in continuous bribing and an unbounded increase in resentment (exploding dynamics). The model underscores the complexity of addressing corruption, emphasizing the need to balance reducing corruption with preventing excessive political instability. Societal forgiveness and sensitivity significantly shape corruption dynamics and public resentment. While forgiveness reduces long-run resentment, it concurrently exacerbates long-term corruption and, on balance, may have a detrimental effect on long-term welfare. Sensitivity has no long-run effect on resentment, while it reduces both corruption activity and political instability in the long term. Finally, exogenous political instability exacerbates corruption, resentment, and the risk of exploding dynamics.

We develop a conceptual model characterizing two types of individuals: one myopic and the other hyperopic. A myopic individual ignores his private contributions to both a social and private negative externality, as well as the effect that his accumulation of stuff (i.e., the stock of consumption goods) has on his habit parameter. A hyperopic individual internalizes both externalities as well as his habit-formation effect. We find that the hyperopic individual consumes a greater amount of a clean good and a lesser amount of a dirty good, with the magnitude of the latter difference being greater than the magnitude of the former. Consequently, the hyperopic individual's cumulative consumption of the two goods is lower. The hyperopic individual's lower cumulative consumption also contributes to a less-persistent consumption habit. Further, we explore the extent to which the allocation of consumption across the clean and dirty goods made by an astigmatic individual (an intermediate type of individual who internalizes the private externality, as well as the habit-formation effect) diverges from the myopic individual's allocation. We consider the implications of our findings for traditional environmental tax policy as it applies to myopic and astigmatic individuals. Conceptually, we find that Pigovian tax rates in the presence of habit formation diverge from corresponding standard rates that ignore habit formation based on the difference between the magnitudes of the cumulative marginal benefit associated with habit formation and the marginal cost associated with the accumulation of stuff. Results from a simple numerical analysis demonstrate these conceptual results and more.

We develop a model to analyze policymakers' incentives to install policy rules, comparing the case of no rule with a binding and a contingent policy rule that allows policymakers to suspend the rule in response to a sufficiently large shock. First, abstracting from political polarization, we show that the choice of the policy rule depends on policymakers' policy targets. Depending on the policy target, there is an unambiguous ranking going from a no-rule regime to a contingent rule to a binding rule. Next, allowing for political polarization, the incentive to install the different types of rules changes with political polarization between different policymakers and their probability of being elected into office. Increasing political polarization when there is a sufficiently high election probability for policymakers with a high policy target increases the preference for more binding policy rules. It also leads to stricter rules in a contingent rule regime.

We analyze the self-reporting incentives fostered by a leniency program within a criminal network formed by a supplier of an illegal good and his dealers who compete against each other in the product market. We show that when it is viable, a first-informant rule always performs better than an all-informant rule—that is, it induces a lower level of crime. Nevertheless, the viability of a first-informant rule may be compromised if the baseline probability of conviction is sufficiently low, thereby placing disproportionate reliance on leniency over other investigative efforts for securing convictions.

We conduct a theoretical analysis to explore how the distribution of wealth in society impacts the social costs of crime and law enforcement. We show that a reduction in inequality reduces these costs when enforcement and nonmonetary punishment are equitable, that is, they do not discriminate among offenders based on their wealth. However, when enforcement or nonmonetary punishment is discriminatory, a reduction in inequality may increase the social costs of crime and law enforcement, in particular when it occurs among poorer individuals. Thus, there is a complementarity between equity in criminal justice and distributional equity.

This paper begins with a survey of the literature on the political economy approaches to labor income taxation. We focus on recent progress made by examining in detail the specific properties of nonlinear taxes derived in the context of voting. Next, we present new results on the existence of a majority voting equilibrium that unifies work in the standard framework. Finally, we discuss how recent theoretical results help us uncover empirical patterns from the last 50 years in the US tax system, namely, a sharp decrease in top marginal tax rates, the rise of the Earned Income Tax Credit, and increased progressivity in the middle of the income distribution.

This paper explores the concept of ex post stability in voting systems, shifting the focus from the traditional ex ante perspective, where preferences are uncertain, to a setting where agents' preferences are fully known. We offer a comprehensive characterization of ex post stable constitutions within deterministic voting rule environments. We bridge the theoretical gap between ex post and ex ante stability, shedding light on their intricate relationship and implications for the design and evolution of voting systems. Additionally, our research further evaluates the resilience of these constitutions to changes in the voting environment, particularly their flexibility in response to varying alternative rule sets. This study not only contributes to a deeper understanding of constitutional stability but also provides insights into the dynamics of collective decision-making processes.

We study the rent-seeking phenomenon using a simple, static general equilibrium model. The economy consists of two sectors, both employing a constant returns-to-scale technology with labor as its sole input. One of the sectors is a monopoly, where a continuum of agents compete for a share of monopoly profits (i.e. rent). Agents are heterogeneous in labor productivity and rent-seeking ability: they face a choice between engaging in (productive) work or vying for a share of the rent (i.e., a contest against other rent-seekers). At the aggregate level, rent-seeking reduces the available amount of labor in the economy and thereby lowers output and welfare (rent-seeking is inefficient). At the individual level, rent-seeking shifts income towards rent-seekers. Consequently, an economy with few rent-seekers tends to have high income inequality: an effect that is exacerbated by the fact that rent is decreasing in the number of rent-seekers (low levels of rent-seeking increase inequity). This tradeoff between efficiency and equity is the primary focus of this paper. We investigate how the distribution of rent-seeking ability and the correlation between labor productivity and rent-seeking ability shape this tradeoff.

For random allocation, whether a desirable rule exists or not hinges on the domain of agents' preferences, whose formation is affected by how objects are presented. We hence propose a model studying how to present objects so that the induced preference domain allows for designing a good rule. Motivated by practices in reality, we model the objects as combinations of several attribute values and a presentation of objects concerns a choice of presenting attributes and a ranking of them. Agents are assumed to formulate their preferences in a lexicographic manner according to the given presentation. We show that the domain of preferences induced by a presentation allows for a strategy-proof, efficient, and envy-free rule if and only if the presented attributes are conditionally binary.

We assess optimal deterministic nonlinear income taxation in a Mirrlees economy with a continuum of risk-averse agents whose utilities are quasilinear in labor. A weak redistribution motive makes random taxes more likely socially dominated by the deterministic policy where after-tax income lotteries are replaced with their certainty equivalents.