Examples in Dynamic Optimal Taxation

  • Mikhail Krastanov
  • Rossen Rozenov
Part of the Annals of the International Society of Dynamic Games book series (AISDG, volume 11)


One famous result in the theory of capital income taxation is that the optimal tax is zero in equilibrium (Chamley, Econometrica 54(3):607–622, 1986; Judd, J. Public Econ. 28:59–83, 1985) . This result has been derived as an open-loop Stackelberg solution to an appropriate differential game. In this paper, we consider specific feedback solutions to three dynamic models of taxation and find that the optimal tax is generally different from zero.


Capital Income Differential Game Optimal Taxation Stackelberg Equilibrium Feedback Nash Equilibrium 
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We would like to express our gratitude to the editors and to unknown referees for many constructive comments and remarks which helped us improve the quality of the paper.


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Institute of Mathematics and InformaticsBulgarian Academy of SciencesSofiaBulgaria
  2. 2.Bulgarian National BankSofiaBulgaria

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