Skip to main content
8 votes
Accepted

Is climate change an economic question?

Climate change in itself, its measurement and the fact that it is happening, and modeling its speed or trying to discover its causes (e.g., carbon emissions, methane emissions and so on) is not an ...
1muflon1's user avatar
  • 56.7k
7 votes

Is my logic on taxation for this question legit?

The burden of taxation is shared among suppliers and demanders according to the price elasticities of supply and demand. The more elastic side carries less of the tax burden. To understand this, note ...
BB King's user avatar
  • 6,158
6 votes
Accepted

What are some good advanced level textbooks on public economics?

The best book in my opinion for your case is definitely Intermediate Public Economics by Jean Hindriks and Gareth D. Myles. It is often used as a standard text for public finance at your level and ...
BB King's user avatar
  • 6,158
6 votes

Why is the USA not capable to pay its debt?

The US is in a privileged position of producing a currency that people in other countries want to use (as reserve). There's even a French name for that. Anyway, a result of that is cheap credit for ...
against very long user names's user avatar
5 votes
Accepted

Nash equilibrium - mistake in proof of paper?

The objective is to show that, as long as $f'(n\hat\theta)\ne \alpha$, a firm can always engineer a package $(p',\hat\theta')=(p+\Delta p,\hat\theta+\Delta \hat{\theta})$ such that (i) a caring ...
GuiWil's user avatar
  • 887
5 votes

Is a universal basic income possible in the United States?

A new report by the Roosevelt Institute answers exactly that using a Keynesian, Stock-Flow-Consistent model calibrated to the US. According to their result, when distributional changes are considered, ...
luchonacho's user avatar
  • 8,591
5 votes

Why don't public transport networks have more routes to each terminal in order to reduce the number of transfers?

The people who do the planning do explicitly account for the value of time and convenience to transit users. At least, in all the systems I've worked on. (source: I have had jobs where I worked on ...
410 gone's user avatar
  • 8,168
5 votes
Accepted

Understanding an article in the BMJ about the sugar tax

A little background. The paper relates to a tax (known as the Soft Drinks Industry Levy) introduced by the UK in 2018 on some soft drinks, levied on manufacturers (not consumers), with the aim, ...
Adam Bailey's user avatar
  • 8,414
5 votes
Accepted

Pigouvian tax with general utility function

The first order condition for individual $a$ when the price of $y$ equals $p_y(1+t)$ is given by: $$ \frac{\partial u_a}{\partial y_a} = p_y(1+t) \left(\frac{1}{p_x} \frac{\partial u_a}{\partial x_a} \...
tdm's user avatar
  • 12.2k
5 votes
Accepted

How can I show convexity of this value function?

Suppose that $u(C,l)=\sqrt{C}-l^2$ and $f(l,A)=\big(l+g(A)\big)^2$, where $g$ is any function of $A$ that is not convex. Then $$u\big(f(l,A),l\big)=l+g(A)-l^2.$$ The optimal labor supply is given by $...
Michael Greinecker's user avatar
4 votes

Why is capital income taxed differently than wage income?

There are two main reason for the difference in tax rates that I see from the literature. First, some papers argue that the optimal tax rate on capital is zero. This is the famous "Chamley-Judd" ...
BB King's user avatar
  • 6,158
4 votes

Does the 2nd welfare theorem involve government intervention?

The second welfare theorem does not necessarily involve a government as such. It does not matter for the theorem who redistributes the resources. Nevertheless, in practice this will most likely often ...
BB King's user avatar
  • 6,158
3 votes

Can a progressive marginal taxation be regressive in terms of average tax rate?

$$ \frac{\partial\frac{T(Y)}{Y}}{\partial Y}= \frac{T'(Y)}{Y} - \frac{T(Y)}{Y^2} $$ This can only be smaller than 0 if $$ T'(Y) < \frac{T(Y)}{Y} $$ In other words, the marginal tax rate needs ...
E. Sommer's user avatar
  • 1,327
3 votes
Accepted

Contest game: second order condition satisfied, but negative profits?

Well it says in the paper on p. 423: "Thus the sufficiency assumption implies a unique pure strategy equilibrium. And if the sufficiency assumption is violated, at least one player will receive a ...
Maarten Punt's user avatar
  • 2,373
3 votes

Is my logic on taxation for this question legit?

It depends on whether all the tickets are sold or not. If sold out, all the the tax burden is borne by the buyers. If not, then it's shared. If sold out, buyers pay all the tax. If all 39,000 ...
FreeMarketUnicorn's user avatar
3 votes
Accepted

Effect of changing Non Labor Income on Consumption-Leisure problem

This has to do with the form of the utility function. Assume instead that,say, we had $$U(c,l) = c^{1/2} - \frac{1}{2}l^2$$ Does now $R$ affect the labor-supplied decision? Solve it and explore. ...
Alecos Papadopoulos's user avatar
3 votes
Accepted

Equity-efficiency tradeoff examples

Publicly funded healthcare and social welfare schemes typically serve redistributive functions and therefore can be considered as promoting equity (among the well-off and the poor). At the same time, ...
Herr K.'s user avatar
  • 15.4k
3 votes

Unions, right to work laws

For the googling part of your question: In the context of US labor politics, "right-to-work laws" refers to state laws that prohibit union security agreements between companies and labor unions....
Giskard's user avatar
  • 29.2k
3 votes
Accepted

The optimal tax rate

It does determine the optimum tax rate when the weighted average elasticity is constant. If $e (1-\tau) = \frac{1-\tau}{z} \frac{dZ}{d(1-\tau)} = e$ there is no issue, because then regardless of a tax ...
1muflon1's user avatar
  • 56.7k
3 votes
Accepted

How can I formulate the following optimization problem?

If you want to determine how much carbon dioxide should be omitted by solving an optimization problem, then a constraint on the quantity of $CO_2$ isn't quite what you need. The normal constraint on ...
Adam Bailey's user avatar
  • 8,414
3 votes
Accepted

Is there a consensus in economics about public housing?

Found a couple on the internet which I didn't read. If you think they're of no use, let me know and I'll take down the answer. Does public housing reduce housing cost burden among low-income families ...
solow supremacy's user avatar
2 votes
Accepted

Is information technology going to turn most "common goods" into private goods?

Many obstacles to converting common goods into private goods are legal or normative rather than technological. For example, the technology necessary for congestion pricing of traffic is long ...
BKay's user avatar
  • 16.3k
2 votes

Simple Sketch of Mirrlees 1971

There is also a good discussion in "Contract Theory" by Bolton and Dewatripont. It is discussed in terms of non-linear pricing in Chapter 2, "Hidden Information and Screening". However, Mirrlees ...
jmbejara's user avatar
  • 9,355
2 votes

Negative expenditures in public budgets

There are several issues here, but the three most significant are: The National Accounts treatment of the public sector, which is set out in international standards and controlled by the Office for ...
Henry's user avatar
  • 4,765
2 votes

Can a spending freeze solve the problem of the Italian enormous government debt?

This question is somewhat political, and runs into the area of “opinion-based,” which this site has to avoid. I am only going to attempt to discuss part of it. There’s some long-running economic ...
Brian Romanchuk's user avatar
2 votes
Accepted

Aggregating in a Continuum

To obtain $\frac{\partial y}{\partial z_n}=0$, you implicitly assume that each consumer takes its own skill level as given. And in such a case, in reality the consumer optimizes with respect to labor ...
Alecos Papadopoulos's user avatar
2 votes

price floor and price ceiling

If the price ceiling is above equilibrium price, then the market would just settle for the equilibrium price, and the price ceiling would have no effect. Same thing for price floors: if the price ...
Herr K.'s user avatar
  • 15.4k
2 votes

"The citizens know their own utility functions better than the politicians"

Free to Choose by the 1976 Nobel Prize winner Milton Friedman. You can hear the arguments directly from Friedman in this ten part video.
H2ONaCl's user avatar
  • 941

Only top scored, non community-wiki answers of a minimum length are eligible