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Political dynamics, public goods and private spillovers

Kam, Timothy; Kao, Tina; Lu, Yingying


Positive and negative spillovers from private activities onto aggregate economic outcomes are empirically significant. How might politics interact with private investment incentives and their externalities? Our theory connects politics to policies which distort private spillovers. This has implications for empirical identification. In our model, for large negative externality there is a unique equilibrium with perpetually high tax rates and majority poor voters. This is a consequence of...[Show more]

CollectionsANU Research Publications
Date published: 2020
Type: Journal article
Source: Journal of Economic Behavior and Organization
DOI: 10.1016/j.jebo.2020.06.007


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