Property rights enforcement with unverifiable incomes

Jan U. Auerbach ()
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Jan U. Auerbach: University of Exeter Business School

Economic Theory, 2019, vol. 68, issue 3, No 7, 735 pages

Abstract: Abstract I study the extent of secure property rights a planner can implement. Agents can produce output, appropriate others’ output, or work in property rights enforcement. The planner pays enforcement personnel using taxes collected from producers who can hide income from taxation at a cost. The planner implements perfectly secure property rights by incentivizing production through redistributive taxation and absorbing potential appropriators as enforcement personnel. Both taxation and employment in enforcement institutionalize redistribution that would otherwise take place through appropriation. Higher costs of hiding income permit more redistributive taxation and less enforcement, leading to more production and higher welfare.

Keywords: Costly falsification; Institutions; Property rights; Enforcement (search for similar items in EconPapers)
JEL-codes: O17 P14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00199-018-1141-9

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