Gomes, Renato; Lozachmeur, Jean-Marie; Pavan, Alessandro - Center for Mathematical Studies in Economics and … - 2014
least productive sector. By sacrificing production efficiency, the planner incurs second-order losses in total output, but … income taxes can be sector-specific, the Diamond-Mirrlees theorem (according to which the second-best displays production … efficiency) fails: social welfare (be it Rawlsian or Weighed Utilitarian) can be increased by assigning some agents to their …