=+16.10* Policy Application: Distortionary Taxes with Redistribution: Consider a two-person exchange economy in which I own 200

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=+16.10* Policy Application: Distortionary Taxes with Redistribution: Consider a two-person exchange economy in which I own 200 units of x1 and 100 units of x2 while you own 100 units of x1 and 200 units of x2

.

A. Suppose you and I have tastes that are quasilinear in x1

, and suppose that I sell x1 to you in the competitive equilibrium without taxes.

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