Screening with convex menus and optimal flow taxation

• 成果类型: Article
• 署名作者: Rothschild, Casey
• 署名单位: Wellesley College
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2019.104052
• 发表日期: 2019
• 关键词: Convexification; Ironing; Tax smoothing

摘要

This paper considers a family of screening problems in which the principal is constrained to offer only convex menus. Applications include: (i) optimal flow taxation when individuals can substitute consumption and leisure inter-temporally; (ii) optimal product design for a linear-pricing monopolist; (iii) non-exclusive cum-linearly-priced annuity markets. A modified version of a Myerson (1979)-Mirrlees (1971) direct mechanism in which standard incentive compatibility constraints are replaced by no-convexification constraints can be used to compute optimal allocations in this family of problems. In the flow taxation application, the optimal tax schedule necessarily features progressive marginal tax rates, typically features distortions at the top, and can be analyzed by adapting standard ironing techniques. (C) 2019 Elsevier B.V. All rights reserved.