Bergman, Malin - Economics Institute for Research (SIR), … - 2003
well as social welfare in low-tax economies, where the degree of income dispersion is high between, but not within regions. … all feasible tax rates.
Assumption 1. Assume that
y−x
2(y+x)
>
2λx
(1−λ)(y+x)
and that
1
2
>
λy−q
λy
.
Note that the … bound of y is 2x.
3.4. Equilibrium 4
Finally, in the fourth equilibrium, the tax rate is high enough to discourage all …