1. In Section 3.1, we argued that there was a parallel between the principal agent problem when...

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1. In Section 3.1, we argued that there was a parallel between the principal–

agent problem when a = 0 and the well-known Laffer curve for a government’s tax revenues. What does the full solution to the principal–agent problem in Section 3.2 suggest about optimal tax policy? How practical is this suggestion?

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