On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints
When a government intervenes in markets by setting a target amount of goods/services traded, its tax/subsidy policy is optimal if it entices the market participants to obey the policy target while achieving the highest possible social welfare. In the model of job market interventions by Kojima et...
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Format: | Article |
Language: | English |
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Society for the Promotion of Mechanism and Institution Design
2020-12-01
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Series: | Journal of Mechanism and Institution Design |
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Online Access: |
http://www.mechanism-design.org/arch/v005-1/p_02.pdf
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author | Koji Yokote |
author_facet | Koji Yokote |
author_sort | Koji Yokote |
collection | DOAJ |
description | When a government intervenes in markets by setting a target amount of goods/services traded,
its tax/subsidy policy is optimal if it entices the market participants to obey the policy target while achieving the highest possible social welfare.
In the model of job market interventions by Kojima et al. (2019),
we establish the existence of optimal taxes/subsidies as well as their characterization and efficient computation.
Our methodological contribution is to introduce
a discrete version of Karush-Kuhn-Tucker's saddle-point theorem
based on the techniques in discrete convex analysis.
We have two main results: we
(i) characterize the optimal taxes/subsidies and the corresponding equilibrium salaries as the minimizers of a Lagrange function, and
(ii) prove that the function
satisfies a notion of discrete convexity (called L#-convexity).
These results together with Kojima et al.'s (2019) result imply that
an optimal tax/subsidy level exists and is calculated via a computationally efficient algorithm. |
first_indexed | 2024-12-14T01:53:11Z |
format | Article |
id | doaj.art-f9427867e54843f69410ed2c55715d66 |
institution | Directory Open Access Journal |
issn | 2399-844X 2399-8458 |
language | English |
last_indexed | 2024-12-14T01:53:11Z |
publishDate | 2020-12-01 |
publisher | Society for the Promotion of Mechanism and Institution Design |
record_format | Article |
series | Journal of Mechanism and Institution Design |
spelling | doaj.art-f9427867e54843f69410ed2c55715d662022-12-21T23:21:18ZengSociety for the Promotion of Mechanism and Institution DesignJournal of Mechanism and Institution Design2399-844X2399-84582020-12-0151377710.22574/jmid.2020.12.002jmi-v5i1a2On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraintsKoji Yokote0 Waseda Institute for Advanced Study, Waseda University, Japan When a government intervenes in markets by setting a target amount of goods/services traded, its tax/subsidy policy is optimal if it entices the market participants to obey the policy target while achieving the highest possible social welfare. In the model of job market interventions by Kojima et al. (2019), we establish the existence of optimal taxes/subsidies as well as their characterization and efficient computation. Our methodological contribution is to introduce a discrete version of Karush-Kuhn-Tucker's saddle-point theorem based on the techniques in discrete convex analysis. We have two main results: we (i) characterize the optimal taxes/subsidies and the corresponding equilibrium salaries as the minimizers of a Lagrange function, and (ii) prove that the function satisfies a notion of discrete convexity (called L#-convexity). These results together with Kojima et al.'s (2019) result imply that an optimal tax/subsidy level exists and is calculated via a computationally efficient algorithm. http://www.mechanism-design.org/arch/v005-1/p_02.pdf job matchingtaxationdiscrete convex analysis |
spellingShingle | Koji Yokote On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints Journal of Mechanism and Institution Design job matching taxation discrete convex analysis |
title | On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints |
title_full | On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints |
title_fullStr | On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints |
title_full_unstemmed | On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints |
title_short | On optimal taxes and subsidies: A discrete saddle-point theorem with application to job matching under constraints |
title_sort | on optimal taxes and subsidies a discrete saddle point theorem with application to job matching under constraints |
topic | job matching taxation discrete convex analysis |
url |
http://www.mechanism-design.org/arch/v005-1/p_02.pdf
|
work_keys_str_mv | AT kojiyokote onoptimaltaxesandsubsidiesadiscretesaddlepointtheoremwithapplicationtojobmatchingunderconstraints |