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Author:Tsyvinski, Aleh 

Working Paper
Prizes and patents: using market signals to provide incentives for innovations
Innovative activities have public good characteristics in the sense that the cost of producing the innovation is high compared to the cost of producing subsequent units. Moreover, knowledge of how to produce subsequent units is widely known once the innovation has occurred and is, therefore, non-rivalrous. The main question of this paper is whether mechanisms can be found which exploit market information to provide appropriate incentives for innovation. The ability of the mechanism designer to exploit such information depends crucially on the ability of the innovator to manipulate market signals. We show that if the innovator cannot manipulate market signals, then the efficient levels of innovation can be implemented without deadweight losses - for example, by using appropriately designed prizes. If the innovator can use bribes, buybacks, or other ways of manipulating market signals, patents are necessary.
AUTHORS: Tsyvinski, Aleh; Chari, V. V.; Golosov, Mikhail
DATE: 2009

Report
Optimal indirect and capital taxation
In this paper, we consider an environment in which agents? skills are private information, are potentially multi-dimensional, and follow arbitrary stochastic processes. We allow for arbitrary incentive-compatible and physically feasible tax schemes. We prove that it is typically Pareto optimal to have positive capital taxes. As well, we prove that in any given period, it is Pareto optimal to tax consumption goods at a uniform rate.
AUTHORS: Kocherlakota, Narayana R.; Tsyvinski, Aleh; Golosov, Mikhail
DATE: 2001

Working Paper
Designing optimal disability insurance
In this paper we describe how to optimally design a disability insurance system. The key friction in the model is imperfectly observable disability. We solve a dynamic mechanism design problem and provide a theoretical and numerical characterization of the social optimum. We then propose a simple tax system that implements an optimal allocation as a competitive equilibrium. The tax system that we propose includes only taxes and transfers that are similar to those already present in the U.S. tax code: a savings tax and an asset-tested transfer program. Using a numerical simulation, we compare our optimal disability system to the current disability system. Our results suggest a significant welfare gain from switching to an optimal system.
AUTHORS: Golosov, Mikhail; Tsyvinski, Aleh
DATE: 2003

Working Paper
Optimal indirect and capital taxation
In this paper, we consider an environment in which agents? productivities are private information, potentially multi-dimensional, and follow arbitrary stochastic processes. We allow for arbitrary incentive-compatible and physically feasible tax schemes. We prove that it is typically Pareto optimal to have positive capital taxes. As well, we prove that in any given period, it is Pareto optimal to tax consumption goods at a uniform rate.
AUTHORS: Golosov, Mikhail; Kocherlakota, Narayana R.; Tsyvinski, Aleh
DATE: 2001

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