> > I'm just wondering if it is even > >possible for the supply and demand curves to be shaped shaped in such a > >way that the Laffer curve does not apply to some market. > > Since you asked... > > Take an income tax and the very standard constant elasticity formulations for > demand and supply (they are called constant elasticity because a one percent > increase in the wage always causes the same percentage increase in labor > supply (b) and the same percentage decrease in labor demand (a) no matter > what the wage is): > > Ld=D w^(-a) > Ls=S [w(1-t)]^b
Doesn't this allow labor supply to be unbounded? And isn't this a problem since, for example, you can't supply more than 24 hours of labor per day per person? --Robert Book [EMAIL PROTECTED]
