Essays in microeconomics: Wage subsidy in an optimal redistribution program and bundling hardware and software
Doctor of Philosophy
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.
Economics; Economics, Commerce-Business; Labor economics; Economic theory