Three essays in microeconomic theory

This thesis is a collection of three articles on microeconomic theory. The first two articles are concerned with the issue of race-to-the-bottom when governments engage in competition for some mobile factor. The third article proposes an extension for the many-to-one matching problem by introducing different-size agents.  In the first article, we show how the standard race-to-the-bottom result can be avoided by introducing public good into a tax competition model. Our economy has two jurisdictions populated by perfectly mobile workers divided into two categories: skilled and unskilled. Governments, in pursuit of a Rawlsian objective (max-min), simultaneously announce their plans for investing in public good before deploying a nonlinear income tax schedule. After observing the tax schedules of the governments and their promises to invest in public good, each worker chooses a place of residence and a supply of labour. Thus, governments achieve their redistribution objectives by seeking to attract productive labour through the provision of public goods in addition to favorable taxation policy. We show that there exist equilibria where skilled workers pay a strictly positive tax. In addition, when information on the type of workers is private, there are equilibria for certain parameter values in which unqualified workers receive a net transfer (or subsidy) from the government.  In the second article, we investigate how the Bertrand standard price competition with differentiated products could provide useful insight for Citizenship By Investment programs in the Caribbean. We show that when countries can be classified into two types according to the size of their demand, imposing appropriate uniform minimum price and maximum quota brings countries to an efficient outcome that Pareto dominates the Non-Cooperative Nash Equilibrium.  Finally. in the third article, we explore an extension of the standard many-to-one matching problem by incorporating different-size agents (refugee families) on the many side of the market, to be assigned to entities (homes) with different capacities on the other side. A specific feature of this model is that it does not allow refugee families to be split between several homes. It is well known that many of the desirable properties of matching rules are unachievable in this framework. We introduce size-monotonic priority ranking over refugee families for each home, that is, a host family (home) would always prefer a greater number of members of refugee families until its capacity constraint binds. We show that a pairwise stable matching always exists under this assumption and we propose a mechanism to find it. We show that our mechanism is strategy-proof for refugees: no refugee family could benefit from misrepresenting his preferences. Our mechanism is also refugees optimal pairwise stable in the sense that there is no other pairwise stable mechanism that would be more profitable to all   refugees.

Keyphrases: Income tax competition, Labor mobility, Optimal income taxation, Raceto-the-bottom, Public good, Bertrand price competition, Minimum Price, Maximum quota, Pareto efficiency, Sized agents, Many-to-one matching, Pairwise stability, Sizemonotonicity