When Redistribution Leads to Regressive Taxation
AbstractWe introduce labor contracts in a framework of optimal redistribution: firms have some local market power and try to discriminate among heterogeneous workers. In this setting we show that if the firms have perfect information, i.e., they perfectly discriminate against workers and take all the surplus, the best tax function is flat. If firms have imperfect information, i.e., if they offer incentive contracts, then (under some assumptions) the best redistributive taxation is regressive. Copyright 2007 Blackwell Publishing, Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 9 (2007)
Issue (Month): 4 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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Other versions of this item:
- HARITON, Cyril & PIASER, Gwenaël, 2004. "When redistribution leads to regressive taxation," CORE Discussion Papers 2004020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cyril Hariton & Gwenäel Piaser & Gwenaël Piaser, 2006. "When Redistribution Leads to Regressive Taxation," Working Papers 2006_30, Department of Economics, University of Venice "Ca' Foscari".
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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