We develop an evolutionary model of growth in which agents choose how to allocate their time between private and social activities. We argue that a shift from social to private activities may foster market-based growth, but also generate social poverty. Within a formal framework that merges a...

It is often argued that the optimal level of public good provision is below the first-best level as long as the government's expenditures have to be financed by distortionary taxes. I examine this hypothesis and show that it is correct in a representative consumer economy if (i) the public good...

Recently, it became customary to argue that environmental quality - like ordinary public consumption - is crowded out by distortionary taxation. We show that this hypothesis does not hold provided that the marginal revenue of the environmental tax is positive. In this case, under-provision of...

Due to the use of distortionary taxation, real-world economies should attain a lower level of public expenditures than one might suspect from the analysis of artificial models where lump-sum taxes are assumed to be available. The paper examines this popular hypothesis by means of the two-type...

We consider a model of a single defendant and N plaintiffs where the total cost of litigation is fixed on the part of the plaintiffs and shared among the members of a suing coalition. By settling and dropping out of the coalition, a plaintiff therefore creates a negative externality on the other...