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lecture10full - Elasticity of Substitution and Tax Revenues...

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Endowments
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Substitution and Wealth Effects
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Winners and Losers from a Price Increase
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Consumption and Leisure max C , L u ( C , L ) subject to wL + c = I + wT
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Example: Cobb-Douglas Utility max C , L L 1 / 2 C 1 / 2 subject to wL + c = I + wT
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Taxes and Cobb-Douglas Utility
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Elasticity of Substitution and Tax Revenues
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Unformatted text preview: Elasticity of Substitution and Tax Revenues 2 Income Effects and Tax Revenues When there are no income effects, leisure must increase with a tax on wages as there is only a substitution effect. The Laffer Curve...
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This note was uploaded on 05/13/2010 for the course ECON 105D taught by Professor Cur during the Fall '09 term at Duke.

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lecture10full - Elasticity of Substitution and Tax Revenues...

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