Skip to main content

constraint - Finding optimal taxation policy- constrained optimization




I need to solve two constrained optimization problems where the second problem depends on the results of the first.


The agents in my economy maximize utility: $$\max_{c,d,l} p\ln(c)+\ln(d)+\ln(l)$$ subject to a budget constraint: $$(1-t)w(1-l)+T \ge c+(1+\tau)d$$ where choose $c-$ denotes consumption of non-durable goods, $d$-consumption of durable goods, and $l$- denotes labor supply.


There are two agents in the economy, high skilled and low skilled (denoted by $X_h$ and $X_l$, respectively), so solving for each of them will yield the demand functions: $$c_l (t,\tau,T), c_h (t,\tau,T), d_l(t,\tau,T), d_h (t,\tau,T)$$ and the supply functions: $$l_l (t,\tau,T), l_h (t,\tau,T)$$


This part I can calculate myself but the next part is where I'm struggling. Given these demand and supply functions, the government needs to choose the tax parameters ($t,T,\tau$) that maximize the overall welfare: $\max_{t,\tau,T} p\ln(c_l)+p\ln(c_h)+2(1-p)\ln(\frac{c_l +c_h }{2})+\ln(d_l)+\ln(d_h)+\ln(l_l)+\ln(l_h)$ subject to the resource constraint: $t(w_h(1-l_h)+w_l(1-l_l))+\tau (d_l+d_h) \ge 2T$ Where $t$ is the income tax, $T$ is the lump sum tax and $tau$- denotes the tax on durable consumption. So my first problem is this: how do I solve each agent's constrained optimization problem to find their demand and labor supply functions? And once I've found those, how can I use them to solve the governments optimal tax policy? I've tried manually defining the demand and labor supply functions, and then deriving the social welfare function manually and using solve to find the result: enter image description here


But I'm getting a weird result (see image)


enter image description here I don't understand what <<1>> means or <<32>>...


Once I will have all of this figured out, the final part will be to check the sensitivity of the overall welfare function: $p\ln(c_l)+p\ln(c_h)+\ln(d_l)+\ln(d_h)+\ln(l_l)+\ln(l_h)$ to $p$. I want to see if the overall welfare is maximal when $p=1$ and if it is strictly increasing in $p$. How can I do that?




Comments

Popular posts from this blog

plotting - Filling between two spheres in SphericalPlot3D

Manipulate[ SphericalPlot3D[{1, 2 - n}, {θ, 0, Pi}, {ϕ, 0, 1.5 Pi}, Mesh -> None, PlotPoints -> 15, PlotRange -> {-2.2, 2.2}], {n, 0, 1}] I cant' seem to be able to make a filling between two spheres. I've already tried the obvious Filling -> {1 -> {2}} but Mathematica doesn't seem to like that option. Is there any easy way around this or ... Answer There is no built-in filling in SphericalPlot3D . One option is to use ParametricPlot3D to draw the surfaces between the two shells: Manipulate[ Show[SphericalPlot3D[{1, 2 - n}, {θ, 0, Pi}, {ϕ, 0, 1.5 Pi}, PlotPoints -> 15, PlotRange -> {-2.2, 2.2}], ParametricPlot3D[{ r {Sin[t] Cos[1.5 Pi], Sin[t] Sin[1.5 Pi], Cos[t]}, r {Sin[t] Cos[0 Pi], Sin[t] Sin[0 Pi], Cos[t]}}, {r, 1, 2 - n}, {t, 0, Pi}, PlotStyle -> Yellow, Mesh -> {2, 15}]], {n, 0, 1}]

plotting - Plot 4D data with color as 4th dimension

I have a list of 4D data (x position, y position, amplitude, wavelength). I want to plot x, y, and amplitude on a 3D plot and have the color of the points correspond to the wavelength. I have seen many examples using functions to define color but my wavelength cannot be expressed by an analytic function. Is there a simple way to do this? Answer Here a another possible way to visualize 4D data: data = Flatten[Table[{x, y, x^2 + y^2, Sin[x - y]}, {x, -Pi, Pi,Pi/10}, {y,-Pi,Pi, Pi/10}], 1]; You can use the function Point along with VertexColors . Now the points are places using the first three elements and the color is determined by the fourth. In this case I used Hue, but you can use whatever you prefer. Graphics3D[ Point[data[[All, 1 ;; 3]], VertexColors -> Hue /@ data[[All, 4]]], Axes -> True, BoxRatios -> {1, 1, 1/GoldenRatio}]

plotting - Adding a thick curve to a regionplot

Suppose we have the following simple RegionPlot: f[x_] := 1 - x^2 g[x_] := 1 - 0.5 x^2 RegionPlot[{y < f[x], f[x] < y < g[x], y > g[x]}, {x, 0, 2}, {y, 0, 2}] Now I'm trying to change the curve defined by $y=g[x]$ into a thick black curve, while leaving all other boundaries in the plot unchanged. I've tried adding the region $y=g[x]$ and playing with the plotstyle, which didn't work, and I've tried BoundaryStyle, which changed all the boundaries in the plot. Now I'm kinda out of ideas... Any help would be appreciated! Answer With f[x_] := 1 - x^2 g[x_] := 1 - 0.5 x^2 You can use Epilog to add the thick line: RegionPlot[{y < f[x], f[x] < y < g[x], y > g[x]}, {x, 0, 2}, {y, 0, 2}, PlotPoints -> 50, Epilog -> (Plot[g[x], {x, 0, 2}, PlotStyle -> {Black, Thick}][[1]]), PlotStyle -> {Directive[Yellow, Opacity[0.4]], Directive[Pink, Opacity[0.4]],