von Neumann-Morgenstern stable sets of income tax rates in public good economies (Q943346)

This paper studies the von Neumann-Morgenstern stable sets in public good economy where any allocation is achieved by proportional income tax system. The outcome of he economy is defined to be a set of tax rates. It is shown that if the core (as the set of tax rates) is non-empty it is a unique stable set. Else the set of tax rates is stable if and only if it is a singleton satisfying a certain condition. An example is given to illustrate the existence of such sets. The results of this paper can be regarded as suggesting a collective decision making for tax rates in public good economy. An example is given to show that it gives better results than the familiar majority voting.