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| Author: | Roemer, J. E. |
| Title: | The democratic political economy of progressive income taxation |
| Journal: | Econometrica
1999 : JAN, VOL. 67:1, p. 1-19 |
| Index terms: | Taxation Incomes Politics Econometrics Game theory Models |
| Freeterms: | Equilibrium |
| Language: | eng |
| Abstract: | Why do both right and left political parties typically propose progressive income taxation schemes in political competition ? Analysis of this problem has been hindered by the two-dimensionality of the issue space. To give parties choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two-dimensional. Nash equilibrium in pure strategies of the standard two-party game, whose players have complete preferences over a two-dimensional policy space, generically fails to exist. A new equilibrium concept for political games, based on the fact of factional conflict within parties, is introduced. Each party is supposed to consist of reformists, militants, and opportunists: each faction has a complete preference order on policy space, but together they can only agree on a partial order. |
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