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Consider the model of accountability, but assume that the taxes levied by government are exogenous: the tax levy is always T. Assume that the voter's
Consider the model of accountability, but assume that the taxes levied by government are exogenous: the tax levy is always T. Assume that the voter's utility from tax T and public goods g is ln(g) T. If a politician is reelected, she obtains utility 2r R, where r = T g are rents and R are benefits from reelection. If the politician foregoes reelection by capturing the maximal rents T, then she obtains utility 2T, where > 0 is a parameter that measures the ease with which the politician can obtain rents by shirking (for example, being low could represent legal constraints that increase the cost of absconding with government resources when not providing any public goods). a Let T be such that 2T = R. If T T, then what is the highest level of utility u that the voter can demand of politicians in exchange for reelection? You can assume that > T (can you explain what this assumption implies in words?)
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