In this paper, the authors suggest a way in which a monopolistic insurance firm can improve segmentation of its market by conditioning the price of insurance on the quantity of risky assets held by its clients. They derive the optimal linear pricing scheme and show that the firm's profit...

The authors study the design of supervisory functions in an organization with one principal and two agents. Each agent can perform supervision activities regarding the other agent. They characterize the way the principal must structure incentive payments to avoid any collusive activity between...

This paper incorporates tax evasion into the analysis of optimal linear income taxation. Tax evaders can influence the probability of being caught, if audited, through expenditures on concealment. It is proved that tax evasion can make a given tax system more as well as less progressive...

We consider a two-period overlapping generations model in which individual voters differ by age and by productivity. In such a setting, a redistributive pay-as-you-go system is politically sustainable, even when the interest rate is higher than the rate of population growth. The workers with...