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on Public Finance |
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Issue of 2011‒05‒24
four papers chosen by |
| By: | Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars |
| Abstract: | In many countries entrepreneurship is promoted through tax reductions for small businesses and by various government support schemes. We analyze the effects of such policies to subsidize small businesses in a setting where both the risk-return characteristics of the selected innovation project and the mode of commercialization chosen by entrepreneurs (market entry versus sale to an incumbent firm) are endogenous. We show that government programs to support small businesses foster market entry by entrepreneurs but, at the same time, give an incentive to choose low risk projects, due to the existence of limited loss o®set provisions. This points to a basic trade-off be- tween the goals of raising competition in technology-intensive markets and the desire of governments to foster risky `breakthrough' innovations. |
| Keywords: | business taxation; innovation; market entry |
| JEL: | H25 L13 M13 O31 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:12245&r=pub |
| By: | Shun-ichiro Bessho; Masayoshi Hayashi |
| Abstract: | We investigate the effects of marginal changes of marginal tax rates of Japanese income tax system, computing the social marginal costs of public funds (SMCF) generated by marginal increase in tax rates. We use large micro data sets on Japanese households, and estimate a structural discrete choice model of household labor supply. Our estimation results show that the average of total elasticity of males ranges between 0.0276 and 0.0521, and that of female between 0.0429 and 0.2134. Based on the estimated utility functions, we find that SMCF for raising the marginal tax rate applied for those with low- or medium-income level is smaller than those with more income. Our results could suggest Japanese income tax system should be less progressive. |
| Keywords: | Social marginal cost of public funds, structural discrete choice model, household labor supply |
| JEL: | H21 H24 H31 J22 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd10-181&r=pub |
| By: | Anastasia Litina (Department of Economics, University of Ioannina); Theodore Palivos (Department of Economics, University of Macedonia) |
| Abstract: | Do developed countries experience extensive corruption and if so how should they treat it? Evidence from countries in which tax evasion and various forms of corruption coexist and interact (e.g. Greece) indicates that the answer is positive. We address this problem by constructing an overlapping generations model com- prising two distinct groups of agents, citizens and politicians. Citizens decide the fraction of their income that they report to the tax authorities. Politicians decide the fraction of the public budget that they peculate. In such a context, multiple self-ful?lling equilibria can emerge: a "good"("bad") equilibrium with low (high) corruption and high (low) level of spending on education. It is shown that standard deterrence policies (e.g., fines) cannot eliminate multiplicity. Interestingly, whenever corruption may corrupt, policies that impose a strong moral cost on tax evaders and corrupt politicians can lead to a unique equilibrium. |
| Keywords: | Corruption, Tax Evasion, Multiple Equilibria, Stigma. |
| JEL: | D73 E62 H26 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2011_07&r=pub |
| By: | Hirofumi Yamamura (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | We study a one-dimensional voting game in which voters choose a policy from a one-dimensional policy set over which voters have single-peaked preferences. The purpose of this paper is to analyze coalitional behaviors under any given voting mechanism. We employ the notion of strong Nash equilibrium and identify a necessary and su¢ cient condition for a voting mechanism to possess a strong Nash equilibrium by using the minimax theorem. We moreover show that any strong Nash outcome, if it exists, results in an outcome recommended by a particular augmented median voter rule. |
| Keywords: | Single-peakedness, Augmented median voter rule, Strong Nash equilibrium, Coalition-proof Nash Equilibrium, Minimax theorem, Manipulation. |
| JEL: | D78 D72 C70 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2011-21&r=pub |