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Political competition and Mirrleesian income taxation: A first pass

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  • Bierbrauer, F.J.
  • Boyer, F.J.

Abstract

We study Downsian competition in a Mirrleesian model of income taxation. The competing politicians may di er in competence. If politicians engage in vote-share maximization, the less competent politician's policy proposals are attractive to the minority of rich agents, whereas those of the competent politician are attractive to the majority of poor agents. The less competent politician wins with positive probability, which gives rise to a political failure in the sense of Besley and Coate (1998). Political failures are avoided if politicians maximize winning probabilities. Nevertheless, the two equilibria cannot be Pareto-ranked, the minority may be better o under vote-share maximization.

Suggested Citation

  • Bierbrauer, F.J. & Boyer, F.J., 2011. "Political competition and Mirrleesian income taxation: A first pass," Cambridge Working Papers in Economics 1108, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1108
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    Cited by:

    1. Marcus Berliant & Pierre C. Boyer, 2024. "Politics and income taxes: Progress and progressivity," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(4), August.
    2. Ornelas, Emanuel & Cunha, Alexandre B., 2014. "Political Competition and the Limits of Political Compromise," CEPR Discussion Papers 9909, C.E.P.R. Discussion Papers.
    3. Alexander Shapoval & Shlomo Weber & Alexei Zakharov, 2019. "Valence influence in electoral competition with rank objectives," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(3), pages 713-753, September.
    4. Urbain T. Yogo1 & Martine M & Ngo Njib, 2016. "Political competition and tax revenues in developing countries," WIDER Working Paper Series 116, World Institute for Development Economic Research (UNU-WIDER).
    5. Prummer, Anja, 2020. "Micro-targeting and polarization," Journal of Public Economics, Elsevier, vol. 188(C).
    6. Darong Dai, 2020. "Voting over selfishly optimal tax schedules: Can Pigouvian tax redistribute income?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1660-1686, September.
    7. Urbain T. Yogo & Martine M. Ngo Njib, 2018. "Political Competition and Tax Revenues in Developing Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 302-322, March.
    8. Alexandre B Cunha & Emanuel Ornelas, 2018. "The Limits of Political Compromise: Debt Ceilings and Political Turnover," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 781-824.
    9. Pierre C. Boyer & Felix J. Bierbrauer, 2014. "The Pareto-Frontier in a Simple Mirrleesian Model of Income Taxation," Annals of Economics and Statistics, GENES, issue 113-114, pages 185-206.
    10. Alpino, Matteo & Asatryan, Zareh & Blesse, Sebastian & Wehrhöfer, Nils, 2022. "Austerity and distributional policy," Journal of Monetary Economics, Elsevier, vol. 131(C), pages 112-127.
    11. Brett, Craig & Weymark, John A., 2017. "Voting over selfishly optimal nonlinear income tax schedules," Games and Economic Behavior, Elsevier, vol. 101(C), pages 172-188.
    12. Anja Prummer, 2016. "Spatial Advertisement in Political Campaigns," Working Papers 805, Queen Mary University of London, School of Economics and Finance.
    13. Felix J. Bierbrauer & Pierre C. Boyer, 2016. "Efficiency, Welfare, and Political Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 461-518.
    14. Brett, Craig & Weymark, John A., 2016. "Voting over selfishly optimal nonlinear income tax schedules with a minimum-utility constraint," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 18-31.
    15. Renaud Bourlès & Michael T. Dorsch & Paul Maarek, 2019. "Income Taxation and the Diversity of Consumer Goods: A Political Economy Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 960-993, July.
    16. Darong Dai & Guoqiang Tian, 2023. "Voting over selfishly optimal income tax schedules with tax-driven migrations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 183-235, January.
    17. John Roemer, 2012. "The political economy of income taxation under asymmetric information: the two-type case," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(1), pages 181-199, March.
    18. William Howell & Stefan Krasa & Mattias Polborn, 2020. "Political Conflict over Time," American Journal of Political Science, John Wiley & Sons, vol. 64(3), pages 554-568, July.

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    More about this item

    Keywords

    Electoral Competition; Non-linear Income Taxation; Candidate Quality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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