Journal of Public Economic Theory最新文献

In a simple taxation framework, we analyze a taxpayer's decision of whether to report income truthfully or engage in an evasion game with the tax agency. Specifically, taxpayer and tax agency can expend efforts, respectively, to conceal income and detect evasion. These activities are costly, and the final outcome—whether evasion is detected or not—is stochastic, and depends endogenously on the relative abilities of the contestants and on the policy parameters set by the authority. We present two main results: (i) evasion always occurs at relatively low tax rates, and then it may exhibit a U-shaped relationship with the tax rate; (ii) at the revenue-maximizing tax, the government's revenue is invariant to both detection efficiency and penalty rate.

When confronting economic stagnation, innovation (product innovation in particular) is often cited as an effective stimulus because it is assumed to encourage household consumption and lead to higher demand. Using a secular stagnation model with wealth preference, we examine the effects of product innovation on employment and consumption. This study examines three types of product innovation, including quantity-augmenting-like innovation, variety expansion, and addictive innovation. The first works as if a larger quantity were consumed although the actual quantity remains the same, the second increases the variety of consumption commodities, and the third reduces the elasticity of the marginal utility of consumption. We find that the first and second always reduce both consumption and employment, whereas the third can expand them. It suggests that policy makers should carefully choose the type of product innovation to promote as an economic stimulus: addictive innovation can stimulate business activity whereas quantity-augmenting-like innovation and variety expansion always worsen stagnation.

We model an online health marketplace hosting telehealth services as a two-sided market facilitating patient-doctor interactions. We show that, in the laissez-faire equilibrium, a profit-maximizing platform serves too few patients and doctors, compared to the social optimum, because it does not internalize cross-group network externalities. We demonstrate under what conditions introducing a tax-subsidy policy system leads to an increase in the number of agents toward the socially optimal levels. We find that any positive subsidy under the set of policies improves participation and increases interaction benefits, but it is only welfare-enhancing if the subsidy is low enough. We demonstrate that the set of policies is particularly effective in emerging telehealth markets, where demand for medical services is high, doctors' competition is insignificant, and platform rivalry has yet to develop.

Tradeable permits and emissions taxes are compared in a multi-country global emissions game with perfectly competitive firms and a trans-boundary production externality. In a one-shot game, comparing welfare under the Nash equilibria, it is shown that tradeable permits are superior to emissions taxes. In an infinitely-repeated game, comparing the discount factors required to sustain a global International Environmental Agreement (IEA), it is shown that it is easier to sustain cooperation with tradeable permits than with emissions taxes when the number of countries is sufficiently large. In a coalition-formation game, the number of countries in a stable IEA is two with tradeable permits, but may be all countries in the world with emissions taxes.

Polarization is considered one of the most serious challenges in democratic countries. While substantial evidence points to exaggerated perceptions of polarization—called false polarization—whether it can persist in the long run remains understudied. This paper develops a social learning model in which each citizen belongs to either of two political groups and holds either of two attitudes on a controversial issue. In each period, two citizens—one from each group—publicly express their opinions on the issue. Citizens havePolitical polarization is considered one of the conformity motives, but their distribution could be misperceived. We show that false polarization may arise as pluralistic ignorance even when the majority shares the same attitude across the two groups. Specifically, when citizens underestimate others' conformity motives, perceived polarization can trigger a self-reinforcing spiral, leading both groups to appear polarized. Consequently, both groups may continue to publicly express different opinions. Finally, we discuss conditions under which the formation of echo chambers either mitigates or exacerbates false polarization.

This paper analyzes the stationary welfare and local stability implication of useful public spending in a discrete-time one-sector monetary economy with Taylor rule. Public spending, financed through a flat income tax, is useful and exerts externalities on production. In our economy, money is needed for transaction purposes. We show that the introduction of a public spending exerting externality in the production may lead to multiplicity and indeterminacy. When the externality in production is low enough, under a passive interest rate feedback rule, two steady states emerge and could be either locally determinate or indeterminate, depending on the interplay between the intertemporal elasticity of substitution of consumption and the elasticity of the interest rate, while under an active interest rate feedback rule, two interior locally determinate steady states and two liquidity trap locally determinate steady states exist. When externality in production is high enough, a unique local determinate interior steady state occurs, while under an active interest feedback rule, a unique liquidity trap steady state and a unique interior steady state occur, and both are locally determinate. When both two interior steady states and two liquidity trap steady states exist, when the capital stock is low, the interior steady state has a higher level of capital than the one of the liquidity trap, while, when the capital stock is high, it is the liquidity trap steady having a higher level of capital. Finally, liquidity trap equilbria Pareto-dominate the interior equilibria in view of the zero cost of money.