Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46485 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3163
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The Mirrleesian model of income taxation restricts attention to simple allocation mechanism with no strategic interdependence, i.e., the optimal labor supply of any one individual does not depend on the labor supply of others. It has been argued by Piketty (1993) that this restriction is substantial because more sophisticated mechanisms can reach first-best allocations that are out of reach with simple mechanisms. In this paper, we assess the validity of Piketty's critique in an independent private values model. As a main result, we show that the optimal sophisticated mechanism is a simple mechanism, or, equivalently, a Mirrleesian income tax system.
Subjects: 
optimal income taxation
mechanism design
JEL: 
D82
D86
H21
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
273.33 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.