Exercise 22.8. In the model with political replacement in subsection 22.3.2, suppose that 0 () < 0.

Exercise 22.8. In the model with political replacement in subsection 22.3.2, suppose that η0 (·) < 0. Show that in this case the tax rate preferred by the elite is less than 1 − α and that when the elite can block technology adoption, they will not choose to do so. Explain the intuition for this result. What types of institutional structures might lead to η0 (·) < 0 as opposed to η0 (·) > 0.