GOOD AND BAD EQUILIBRIA WITH THE INFORMAL SECTOR

Discussion Papers from University of Nottingham, School of Economics

Abstract: We examine whether an economy can have a bad (small or no formal sector, high taxes) as well as a good (small or no informal sector, low taxes) equilibrium. When the government maximizes instantaneous formal sector welfare, this can occur if the elasticity of average to marginal cost for the public good is less than one. More regard

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Journal Article: Good and Bad Equilibria with the Informal Sector (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notecp:06/01

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