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Bunching and second-order conditions: A note on optimal tax theory

Lollivier, Stefan; Rochet, Jean-Charles (1983), Bunching and second-order conditions: A note on optimal tax theory, Journal of Economic Theory, 31, 2, p. 392-400. http://dx.doi.org/10.1016/0022-0531(83)90086-8

Type
Article accepté pour publication ou publié
Date
1983
Journal name
Journal of Economic Theory
Volume
31
Number
2
Publisher
Elsevier
Pages
392-400
Publication identifier
Metadata
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Author(s)
Lollivier, Stefan
Rochet, Jean-Charles
Abstract (EN)
We present in this note a simple non-linear taxation model in which the agents are indexed by a one-dimensional parameter. Our purpose is to propose a method of resolution and to compute the optimal solution. We point out that the solution could not always be obtained with a simple derivation of the first-order conditions of the control problem under consideration, and we show the necessity to take into account the second-order conditions.
Subjects / Keywords
optimization; simple non-linear taxation model