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Durham University

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Publication details

Reinhorn, L. (2013). Production efficiency and excess supply. Mathematical Social Sciences 65(2): 92-100.

Author(s) from Durham


This paper demonstrates that intermediate goods should not be taxed even in the presence of dividend payments to households. We also find that optimal government policy in a second best world may include stockpiles of output—private supply exceeds private demand, and the government purchases the surplus. This may provide a possible explanation for some agricultural policies.