The more pressure from the non-elite public forces the state to spend on public goods, the lower the elite share of tax revenue and the lower the value of φ; the more tax revenue the elite can command without diversion to public goods provision, the higher is φ. [...] If a member of the elite controls the innovation, the elite maximizes the sum of the utility accruing to that portion of the elite that does not control the innovation (including those affected by the innovation), plus the surplus of innovators in the formal sector. [...] Otherwise, the elite balances the interests of the elite member that deploys the innovation with the interests of those that the innovation affects. [...] Finally, the greater the entry barriers, the greater the incentives for the elite to appropriate the innovation. [...] The more complementary or rival and the more general-purpose is the innovation, the farther away from the top of the Laffer curve (on the respective side) the elite sets the tax rate.
- Pages
- 45
- Published in
- Canada
