Journal of Public Economic Theory最新文献

This paper examines the optimal dynamic taxation of capital in the context of skill-biased technological change. The study reveals that the widening wage gap, coupled with the complementarity between consumption and leisure, provides a novel rationale for capital taxation. We demonstrate that taxing capital is beneficial in economies experiencing persistent skill-biased technological advancements, even if the capital is skill-neutral and the complementarity between consumption and leisure is time invariant. Converse results appear when leisure substitutes for consumption. Statistics-based optimal tax formulas are provided to show how the government can dynamically mitigate the impacts of various technological changes through the utilization of labor and capital income taxes.

This paper studies the optimal bailout coverage of a media firm. Driven by the incentive to lower its expected borrowing costs, the media firm's coverage tends to favor the banking sector. However, this pro-bank bias results in the same ex ante expected borrowing cost as truthful coverage. While bias reduces borrowing costs when a bailout provides no public benefit, it also leads to higher borrowing costs when a bailout serves the public interest. Ultimately, pro-bank media bias always harms the taxpayer's expected welfare. Moreover, greater financial fragility in the media sector increases the likelihood of bank failures that taxpayers would ideally seek to prevent.

This paper studies strategic effort disclosure in dynamic team contests. Two teams of two players compete in a Tullock contest with teammates' sequential efforts aggregated across two periods using a Cobb–Douglas production function. We examine how equilibrium efforts and winning probabilities are affected by the teams' communication policies: no communication, private communication (efforts shared internally with stage-2 teammates), and public communication (efforts disclosed to stage-2 rivals as well). To describe asymmetric information generated by privately observable efforts for each communication policy profile, we use a perfect Bayesian equilibrium with an appropriate belief refinement for multistage complete information games. In the unique positive-effort equilibrium, the optimal choice of a communication strategy differs for the favorite (the strong team) and the underdog (the weak team). Private communication only benefits the underdog team, fostering effort complementarity and improving their chances of winning and payoffs. In contrast, the favorite team prefers either public or no communication to deter rival efforts or avoid intrateam free-riding. Importantly, endogenous communication policies reshape competitive dynamics, with private disclosure of efforts serving as a strategic equalizer for weaker teams.

We explore the interaction between enforcement and individual-specific sensitivity to moral standards in determining the scope of extortion and collusion in a bureaucracy consisting of corruptible officers. The moral standard is determined by the number of corrupt officers in the bureaucracy, which is a function of both the penalty and the probability of conviction of collusion. Both a higher penalty and a more active independent auditor, like the media, keep the number of corrupt officers in check in a “low” and “medium” penalty situation and incentivize compliance. Extortion occurs only under a “low penalty, low compliance cost” situation. Increases in penalty or judicial accuracy in judging extortion cases or active independent auditing keep extortion in check. Controlling the rent of the firms induces compliance and reduces both extortion and collusion incidents in an economy, having a greater impact on collusion than extortion.

The capabilities of illicit trafficking organizations to expand or contract their periphery and source segments by modifying their link structures pose challenges to law enforcement. This paper scrutinizes the structural response of illicit trafficking organizations to intervention strategies. It also studies how the law enforcement authority should allocate its resources between the source and the periphery segments, given the structural response of trafficking, to minimize the expected harms. The analysis shows that traffickers integrate the supply, possibly build redundant sources and expand in peripheral markets if the source segment is targeted (decapitation), maintain near-maximal expansion by splintering into supply cells or thin subnetworks if the periphery is targeted (amputation). This response subverts law enforcement primarily by suppressing the possibility of trace-back detection of trafficking units through their detected connections. In the transnational trafficking context, it can also stifle intelligence sharing between nations. The optimal intervention, then, is amputation under intermediate budgets and large source fragmentation costs, decapitation under low detection contiguity. Actual policies that prioritize border protection and port-of-entry units can be optimal from national, but not global, perspective.

How does the level of democracy in a country affect the government's treatment of ethnic minorities? I use the Baron–Ferejohn game to model bargaining over government formation and resource division in an ethnically fragmented society. Each ethnic group is a unitary actor, voting weights correspond to ethnic group sizes, and recognition probabilities are proportional to voting weights. The voting quota required to pass a decision is a proxy for the level of democracy. When the majority group exceeds half of the population, the expected payoffs of minorities non-monotonically depend on the voting quota. When the voting quota is small, several minorities may form a winning coalition, so minorities get high expected payoffs. This outcome explains the existence of relatively tolerant autocracies. For intermediate values, a coalition of minorities is insufficient to rule while the majority is sufficient. As a result, it gets most of the surplus, which reflects democracies where minorities are underrepresented in the government and get fewer benefits. Finally, when the voting quota is large, minorities are needed to form a winning coalition, so their expected payoffs are high, too. The latter scenario corresponds to democracies with many constraints on the leader, who needs the support of minorities to get approval from various branches of power.

This paper presents a signaling model of eco-labeling that incorporates social benefits from green consumption through bandwagon effects. A monopoly firm chooses whether to adopt an eco-label when consumers are uncertain about the firm's environmental type but derive utility from both the intrinsic value of green products and their social desirability. The analysis reveals that the strength of bandwagon effects relative to intrinsic value determines equilibrium outcomes: weak effects support only separating equilibria where green firms truthfully label, while strong effects enable both separating and pooling equilibria, creating opportunities for greenwashing. Paradoxically, higher consumer trust in firm greenness expands opportunities for greenwashing by making pooling equilibria profitable over a wider range of labeling costs. However, pooling equilibria require identical labeling costs for both firm types—even small cost differentials favoring green firms will eliminate greenwashing, providing an empirically testable prediction with implications for certification design. Welfare analysis demonstrates that separating equilibria generates strictly higher consumer surplus and producer surplus simultaneously compared to pooling equilibria, while also mitigating the environmental damage from brown production that occurs under pooling. The model identifies a critical labeling cost threshold above which policies that increase green product value lead to market expansion rather than premium positioning, suggesting that subsidies for green product improvement should be coupled with measures which push labeling costs above this threshold. The model reveals a tension in regulatory approach: markets with strong social effects and high consumer trust require the most stringent certification and monitoring to prevent greenwashing, while those dominated by intrinsic value may function effectively with simpler schemes. The results provide theoretical justification for risk-based enforcement strategies that intensify monitoring as consumer trust increases and suggest that third-party certification or targeted subsidies creating cost differentials between firm types can effectively deter greenwashing.