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Hypothetical problem that would not occur in real life probably
:: There is still much to be gleaned from the [[Coase theorem]] and I look forward to discussing and developing it further with you. That said, I think taxes are a form of transaction costs and thus do interfere with an efficient level of activity. If an owner of a railroad is taxed nearly 100%, then he will run the railroad less than if he's taxed at a reasonable rate, or at no rate. Everyone is worse off then.--[[User:Aschlafly|Andy Schlafly]] 22:46, 13 August 2009 (EDT)
:: There is still much to be gleaned from the [[Coase theorem]] and I look forward to discussing and developing it further with you. That said, I think taxes are a form of transaction costs and thus do interfere with an efficient level of activity. If an owner of a railroad is taxed nearly 100%, then he will run the railroad less than if he's taxed at a reasonable rate, or at no rate. Everyone is worse off then.--[[User:Aschlafly|Andy Schlafly]] 22:46, 13 August 2009 (EDT)
::: Your statement is absolutely correct. I was thinking about a situation, so hypothetical, that it would never occur in the real world. My assumptions for this problem that I was playing around with last night are as follows:
:::1. There are two people in this society only.
:::2. Each person has 100 units of value currently.
:::3. One person is called Hard Worker. If Hard Worker works he can earn 20 units of value. After each successive day, this potential drops by 1 unit of value. He would give 2 units of value to have the day off (leisure).
:::4. The second person is called Lazy Man. If Lazy Man works he can earn 10 units of value. After each successive day, this potential drops by 0.5 units of value. He would give 8 units of value to have the day off (leisure).
:::5. There is a a code in this society that requires an 80% tax on gross earnings. The tax receipts are then redistributed equally among the persons.
:::6. Gifts can be exchanged among members, but are also taxed at 80%.
:::7. Hard Worker and Lazy Man can communicate and negotiate freely.
:::The question is, under these circumstances, what will be the equilibrium level of output, in days worked, for Hard Worker and Lazy Man? What will be the final wealth of Hard Worker and Lazy Man? What will be the equilibrium level of output, if there was no redistribution of earnings? What will the final wealth then be of the two persons? Now presume that Lazy Man is no longer lazy. He now only values leisure at 1 unit of value. Solve this problem under both the conditions of redistribution of wealth and no redistribution of wealth. [[User:Brown25|Brown25]] 16:23, 14 August 2009 (EDT)