A one-dimensional model of spatial political competition with endogenous party formation is developed. It is proved that at equilibrium there are only two parties. These parties propose alternatives in the extreme position s of the policy space. The adopted policy, however, is a compromise...

We study an income tax enforcement problem using a principal agent model where the government sets the tax and inspection functions. These functions are announced to the agents and there is no commitment problem. The penalty function for dishonest taxpayers is given exogenously and must satisfy...

This paper develops a political model to analyze the stability of income tax schedules. It isassumed that agents perceive any proposed alternative tax policy as more uncertain than thestatus quo. A tax policy is stable if it is a Condorcet winner. It is well known that in a modelwithout...

A spatial model of party competition is studied in which, (i) Parties are supposed to have ideology. By this we mean that their goal is to maximize the welfare of their constituencies. (ii) The policy implemented after the election does not need to coincide with the one proposed by the winner....

This paper analyses the optimal inspection, tax and penalty functions, in models where the principal knows the distribution of agent types, inspections are perfect and costly, and where the actions and the types of agents are not costlessly observable by the principal. Agents and the principal...

We study the existence of cost monotonic selections of the core in economies with several public goods. Under quasilinear utilities there is a cost inonotonic core selection mechanism if and only if the agents order the bundles of public goods equally. If this is indeed the case, any such...

We propose a two-region two-sector model of uneven development, where technological change benefits either the lagging or the leading region. In this framework interregional transfers may lead to persistent underdevelopment; by raising wages, transfers reduce the chance of the backward region...

We analyze existence of divergent equilibria in a model of endogenous party platforms with stochastic membership, while the membership depends bothon the proposals of the parties and the unobserved idiosyncratic preferecnces of citizens over parties. It is shown that when citizens view the...

We show the generic finiteness of the number of probability distributions on outcomes induced by Nash equilibria for two-person game forms such that either (i) one of the players has no more than two strategies or (ii) both of the players have three strategies, and (iii) for outcome game forms...