 Deterministic Political Competition and Regional Economic Outcomes When the Creative Class Sets Tax PolicyAmitrajeet Batabyal and Hamid Beladi MPRA Paper from University Library of Munich, Germany Abstract: We analyze how deterministic political competition between the elites and the so-called creative class shapes economic outcomes in a stylized region. By deterministic, we mean a case where political power has shifted from the elites to the creative class with probability one. There are three groups in our region: workers, creative class members, and the elites. Unlike previous studies, tax policy in our region is set not by the elites but instead by the creative class. In this setting, we first present a counterintuitive result in which the creative class prefers to tax itself, and not the elites or the workers, with the tax proceeds being redistributed also to itself via lump-sum transfers. Second, we explain why this counterintuitive result makes sense. Finally, we discuss whether the above counterintuitive result will hold if the proceeds of taxation are redistributed using lump-sum transfers to all the groups in our region and not just to the creative class. Keywords: Creative Class; Elite; Lump-Sum Transfer; Political Competition; Tax Policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:124205 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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