The many comments stimulated by our recent paper call into question its concluding assertion that no real paradigm has existed in this area of the theory of competitive supply. Several critics allege that our conclusions as to the existence of production as well as exchange inefficiencies depend on a particular form of the firm's cost function. An alternative form, said to be more in keeping with the standard assumptions of competitive theory, is shown to restore the orthodox analysis in its pristine purity and simplicity, including its implications for the efficacy of Pigovian corrective taxes. While we concede that the critics' specification of the cost function does rescue the orthodox analysis, we dispute whether their formulation more nearly reflects the traditional behavioral assumptions of competitive theory. Indeed, while legitimate argument on the point may exist, we continue to feel that our own formulation embodies the traditional assumptions. In any event, we are unconvinced that the alternative premise should be favored simply because it restores the neatness of the Pigovian prescriptions. The real issue is which of the formulations more accurately captures the behavioral rule followed by competitive decision makers.

One of Buchanan's most important and influential books. The radical idea he conceived was that: our reliance on public debt has amassed a sort of orthodoxy that is commonly -- and needlessly -- assumed by taxpayers, by politicians, and by economists themselves. Buchanan dismisses the nearly universal belief (which continues to this day) that the burden of debt is borne by the current generation, and he argues persuasively that public debt is shouldered in large part by generations still to come. Written in 1958, this book represents Buchanan's first published monograph, and its publication met with much controversy, confusion, and speculation in the economic community. But the book also added to Buchanan's rising stature in the early part of his career as a brilliant and original thinker. The arguments Buchanan lays out in this book had a considerable impact on much of his later work. Buchanan's object here is to establish a set of analytical claims about debt incidence. Current anxieties over implicit Social Security debt are clear indications of the rightness of Buchanan's then-revolutionary theory.

Why should a rationally motivated political decision process generate an inverse relationship between tax rates and tax revenues? There would never seem a logical reason for increasing tax rates beyond maximum revenue limits. In this note, we explain how such a position can emerge and show why, once in such a position, political decision makers may find it difficult to escape.

Why should a rationally motivated political decision process generate an inverse relationship between tax rates and tax revenues? There would never seem a logical reason for increasing tax rates beyond maximum revenue limits. In this note, we explain how such a position can emerge and show why, once in such a position, political decision makers may find it difficult to escape.