Journal of Public Economic Theory最新文献

After the global financial crisis, the use of taxes to enhance financial stability received new attention. This paper analyzes the corrective role of taxes in banking and compares two instruments, namely, an allowance for corporate equity (ACE), which mitigates the debt bias in corporate taxation, and a Pigovian tax on bank debt (bank levy). We emphasize financial stability gains driven by lower bank asset risk and develop a principal-agent model, in which risk taking depends on the bank's capital structure and, by extension, on the tax treatment of debt and equity. We find that (i) the ACE unambiguously reduces risk taking, (ii) bank levies reduce risk taking if they are independent of bank performance but may be counterproductive otherwise, and (iii) taxes are especially effective if regulatory capital requirements are constrained to low levels.

This paper develops a quality-ladder growth model with elastic labor supply and distortionary taxes to analyze the effects of different subsidy instruments: subsidies to the production of final goods, subsidies to the purchase of intermediate goods, and subsidies to research and development (R&D). Moreover, the model is calibrated to the US data to compare the growth and welfare implications of these subsidies. The main results are as follows. First, we analytically show that an optimal coordination of all instruments attains the first-best outcome. Second, in the calibrated economy, we numerically find that for the use of a single instrument, R&D subsidy is less growth-enhancing and welfare-improving than the other subsidies, whereas for the use of a mix of two instruments, subsidizing the production of final goods and the purchase of intermediate goods is most effective in promoting growth but least effective in raising welfare.

We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will fall short of the socially desirable level. Compared with unilateral delegation, bilateral delegation is never worse from a welfare perspective.

This paper examines a theoretical model designed to characterize a static, individual vaccination decision environment. I identify and characterize both equilibrium and socially optimal vaccination behavior and determine how this behavior changes as the effectiveness of the vaccine changes. I also evaluate the individual and social welfare implications of a change in vaccine effectiveness. I find that under certain conditions, an increase in vaccine effectiveness can decrease the number of agents vaccinating in equilibrium due to the positive external effects of vaccination. Notably, it is also possible for individual and total welfare to decrease. This is an undesirable, and perhaps unexpected, consequence of better vaccines. Fortunately, welfare at the social optimum always increases as vaccine effectiveness increases. However, equilibrium behavior often falls short of the social optimum due to the positive externalities created by vaccinating.

In this paper, we theoretically and empirically analyze the impact of competition on poverty. We consider a general equilibrium framework with vertical preferences and compare poverty in a Monopoly setting versus a Duopoly setting considering explicitly the ownership structure. Poverty is measured by the size of the population living below an absolute poverty line. Theoretical results show that the impact of competition on poverty is contingent to the ownership structure, the poverty line and the relative dispersion of the individuals with respect to their intensity of preference for quality and sensitivity to effort: competition can improve or worsen poverty depending on the model's parameters. Empirical findings for the three existing poverty lines ($1.9, $3.2, and $5.5) are consistent to a large extent with our theoretical results.

We provide a competitive equilibrium theory of urban segregation in a linear city. Households demand consumption and housing along the city and are exposed to neighborhood externalities. We show that equilibria that are robust to small coalitional deviations are segregated. Our results explain urban segregation in a standard neoclassical framework and shed new light on the difficulties faced by authorities to integrate cities.

We study proliferation of an action in binary action network coordination games that are generalized to include global effects. This captures important aspects of proliferation of a particular action or narrative in online social networks, providing a basis to understand their impact on societal outcomes. Our model naturally captures complementarities among starting sets, network resilience, and global effects, and highlights interdependence in channels through which contagion spreads. We present new, natural, computationally tractable, and efficient algorithms to define and compute equilibrium objects that facilitate the general study of contagion in networks and prove their theoretical properties. Our algorithms are easy to implement and help to quantify relationships previously inaccessible due to computational intractability. Using these algorithms, we study the spread of contagion in scale-free networks with 1000 players using millions of Monte Carlo simulations. Our analysis provides quantitative and qualitative insight into the design of policies to control or spread contagion in networks. The scope of application is enlarged given the many other situations across different fields that may be modeled using this framework.

We consider a model of Bayesian persuasion with spillovers. A sender provides information to persuade a receiver to take an action with external effects. We consider how government interventions, including corrective subsidy and tax, affect social welfare. In addition to internalizing externalities, government interventions affect social welfare through an informational channel. Subsidies to the sender's preferred action incentivize the sender to reveal less information, but taxes on the sender's preferred action incentivize the sender to reveal more information. Because of such an informational effect, the optimal subsidy and tax may be different from the size of the externalities. In some cases, social welfare is maximized with no government intervention.

We study Kantian equilibria of an $��n�$-player bargaining game, which is a modified version of the well-known divide-the-dollar game. We first show that the Kantian equilibrium exists under fairly minimal assumptions. Second, if the bankruptcy rule used satisfies equal treatment of equals, and is almost nowhere proportional, then only equal division can prevail in any Kantian equilibrium. On the other hand, we show that an “anything goes” type result emerges only under the proportional rule. Finally, using hybrid bankruptcy rules that we construct in a novel fashion, we can characterize the whole equilibrium set. Our results highlight the interactions between institutions (axiomatic properties of division rules) and agents' equilibrium behavior.

This paper considers a model of centralized college admission under the Boston mechanism where students may have uncertainty about their priorities. Students have homogeneous ordinal preferences over colleges, but their preference intensities vary, and the exam scores determine their priorities. In equilibrium, student application strategies take a cutoff form. The strategies depend on their exam scores under post-score submissions, on preference intensities under pre-exam submissions, and on both preference intensities and signals about their exam scores under pre-score submissions. Given these equilibrium strategies, students are better off under pre-exam and pre-score submissions than post-score submissions. When students with the same preference intensities and exam scores receive signals of different qualities, those with bad signals could be hurt by those with good signals.