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Feasible implementation of taxation methods

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Author Info

  • Nir Dagan

    (Department of Economics, Universitat Pompeu Fabra, Ramon Trias Fargas 25-27, E-08005 Barcelona, Spain)

  • Oscar Volij

    ()
    (Department of Economics, Brown University, Providence, RI 02912, USA)

  • Roberto Serrano

    ()
    (Department of Economics, Brown University, Providence, RI 02912, USA)

Abstract

This paper studies implementation of taxation methods in one-commodity environments in which the incomes of the agents are unknown to the planner. Feasibility out of equilibrium imposes that the mechanism depend on the environment. We present two mechanisms. The first one, which requires complete information, implements every taxation method in Nash, strong and coalition-proof equilibrium. The second, where informational requirements are relaxed, implements a large class of consistent and monotone methods in subgame perfect equilibrium. Neither mechanism employs the off-equilibrium devices used by the general theory. Under fully private information no method is implementable.

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Bibliographic Info

Article provided by Springer in its journal Review of Economic Design.

Volume (Year): 4 (1999)
Issue (Month): 1 ()
Pages: 57-72

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Handle: RePEc:spr:reecde:v:4:y:1999:i:1:p:57-72

Note: Received: 12 March 1997 / Accepted: 21 July 1998
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Related research

Keywords: Feasible implementation; taxation methods; consistency; decentralization; flat tax;

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References

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  1. Roberto Serrano & Rajiv Vohra, 1997. "Non-cooperative implementation of the core," Social Choice and Welfare, Springer, vol. 14(4), pages 513-525.
  2. Dagan, N. & Serrano, R. & Volij, O., 1994. "A Non-Cooperative View of Consistent Bankruptcy Rules," Discussion Paper 1994-11, Tilburg University, Center for Economic Research.
  3. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers 1829, Harvard - Institute of Economic Research.
  4. Tian, Guoqiang, 1993. "Implementing Lindahl allocations by a withholding mechanism," Journal of Mathematical Economics, Elsevier, vol. 22(2), pages 169-179.
  5. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  6. Young, H. P., 1987. "Progressive taxation and the equal sacrifice principle," Journal of Public Economics, Elsevier, vol. 32(2), pages 203-214, March.
  7. Thomson, A., 1989. "The Consistency Principle," RCER Working Papers 192, University of Rochester - Center for Economic Research (RCER).
  8. Tian, Guoqiang, 1989. "Implementation of the Lindahl Correspondence by a Single-Valued, Feasible, and Continuous Mechanism," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 613-21, October.
  9. Matthew 0. Jackson, 1989. "Implementation in Undominated Strategies - A Look at Bounded Mechanisms," Discussion Papers 833, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
  11. Piketty Thomas, 1993. "Implementation of First-Best Allocations via Generalized Tax Schedules," Journal of Economic Theory, Elsevier, vol. 61(1), pages 23-41, October.
  12. Tian Guoqiang, 1994. "Implementation of Linear Cost Share Equilibrium Allocations," Journal of Economic Theory, Elsevier, vol. 64(2), pages 568-584, December.
  13. E. Maskin, 1983. "The Theory of Implementation in Nash Equilibrium: A Survey," Working papers 333, Massachusetts Institute of Technology (MIT), Department of Economics.
  14. O'Neill, Barry, 1982. "A problem of rights arbitration from the Talmud," Mathematical Social Sciences, Elsevier, vol. 2(4), pages 345-371, June.
  15. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  16. Postlewaite, Andrew & Wettstein, David, 1989. "Feasible and Continuous Implementation," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 603-11, October.
  17. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
  18. Nir Dagan, 1994. "On the Least Sacrifice Principle in Taxation," Economic theory and game theory 008, Nir Dagan, revised Feb 2008.
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Citations

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Cited by:
  1. Jackson, Matthew O., 1999. "A Crash Course in Implementation Theory," Working Papers 1076, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. Roberto Serrano, 2003. "The Theory of Implementation of Social Choice Rules," Economics Working Papers 0033, Institute for Advanced Study, School of Social Science.
  3. Luis Corchón & Matteo Triossi, 2008. "Implementation with renegotiation when preferences and feasible sets are state dependent," Documentos de Trabajo 255, Centro de Economía Aplicada, Universidad de Chile.
  4. Luis C. Corchon, 2007. "The theory of implementation : what did we learn?," Economics Working Papers we081207, Universidad Carlos III, Departamento de Economía.
  5. Ignacio García-Jurado & Julio González-Díaz & Antonio Villar, 2006. "A Non-cooperative Approach to Bankruptcy Problems," Spanish Economic Review, Springer, vol. 8(3), pages 189-197, September.
  6. Byungchae Rhee, 2004. "A Characterization of Optimal Feasible Tax Mechanism," Econometric Society 2004 Far Eastern Meetings 551, Econometric Society.
  7. Matteo Triossi & Luis Corchón, 2006. "Implementation with State Dependent Feasible Sets and Preferences: A Renegotiation Approach," Carlo Alberto Notebooks 24, Collegio Carlo Alberto.
  8. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
  9. David P�rez-Castrillo & David Wettstein, 2002. "Choosing Wisely: A Multibidding Approach," American Economic Review, American Economic Association, vol. 92(5), pages 1577-1587, December.
  10. Nasrollahi Shahri, Nima, 2010. "The Effectiveness of international investment instruments on the amount of foreign investment (a case study of Iran)," MPRA Paper 36317, University Library of Munich, Germany.
  11. Byungchae Rhee, 2008. "A characterization of optimal feasible tax mechanism," Social Choice and Welfare, Springer, vol. 30(4), pages 619-653, May.

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