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Political competition and Mirrleesian income taxation: A first pass

  • Bierbrauer, F.J.
  • Boyer, F.J.

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.

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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1108.

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Date of creation: 26 Jan 2011
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Handle: RePEc:cam:camdae:1108
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