Risk taking and taxation : An alternative perspective
The analysis of risk taking and taxation has almost invariably been in a portfolio choice framework. This paper presents the alternative perspective of an occupational choice framework - where risk taking involves the additional element of discrete choice between safe and risky activities. It is shown that the specification of equilibrium must of necessity have a general equilibrium character. In this setting the paper develops rules for government intervention in the market equilibrium, and analyses the effects of taxation on risk taking.
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