| My dissertation consists of two unrelated essays. In the first essay, "Wage Subsidy in an Optimal Redistribution Program", I analyze the efficiency of income transfers and wage subsidies as instruments of income redistribution in an optimal taxation framework. I extend the Mirrlees model (1971) of income inequality by specifying a model in which individuals' productivity and wages depend on investment in skill acquisition in addition to ability. The principal result of the research is that a wage subsidy has an important role to play in an optimal system of income maintenance. In the second essay, "Bundling Hardware and Software", a class of simple models is analyzed to explain prevailing bundling practices in computer markets. A profit-maximizing monopolist may over-provide hardware-software bundles, practice "pure bundling" when preferences are symmetric with respect to software, and under-bundle and under-produce software when preferences are asymmetric. |
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