This paper studies a central aspect of optimal income taxation as modelled in Mirrlees' original paper on the topic (identical leisure/consumption preferences, qualitatively homogeneous "skills" in production), namely, whether given concave utilitarianism alone the optimal marginal income tax will be non-negative. A well-known positive answer to this question (in weak inequality form) was given in the said paper which, however, we show requires additive separability of individual utility (in the ordinal and cardinal senses). Our main result here is to derive the required (strict) positivity of the marginal tax under weak conditions, slightly wider than noninferiority of consumption and leisure, with preferences otherwise arbitrary.

THE PROBLEM OF ENTRY receives a great deal of attention in present-day Industrial Economics. The main question typically asked in this connection, ever since the work of Bain and Sylos-Labini, is what the best strategies are for oligopolists facing the threat of entry into their industry, that is, the implications of potential entry on their optimal policies regarding pricing, investment, research and development, advertising, and so on. Were entry to occur, conventional wisdom says, the effects would be unambiguous: profits per firm, and perhaps also output per firm would fall, while the industry as a whole would become competitive in some sense, in particular expanding output. These effects are commonly taken for granted in discussions on entry, as obvious truths or, at best, as underlying assumptions. The natural question arises of whether this deeprooted piece of conventional wisdom is in fact correct for the general case, as the behavior of oligopoloy is, alas, complex enough to keep many surprises in store. Of course, these remarks are not meant to apply to the limit case where barriers to entry are removed altogether, thus breaking entirely the oligopolistic set-up. The effect on profits, in particular, would in this extreme case be necessarily unambiguous, as they would need to be zero in the new equilibrium, be it perfect or monopolistic competition. This is no more than a definition of equilibrium, but perhaps our intuition draws too heavily on this trivial consideration 2 Some of the effects of entry we shall be examining, in particular those on output, have been studied before, albeit in a rather limited form. Frank [1], Okuguchi [3], and Ruffin [4] found that certain reasonable conditions were sufficient for aggregate output to rise and firm-output to fall as entry occurs in the simple Cournot model of oligopoly.3 However, these authors do not examine what

The recent global financial crisis has spurred renewed interest in identifying those reforms in bank regulation that would work best to promote bank development, performance and stability. Building upon three recent world-wide surveys on bank regulation (Barth et al., 2004, Barth et al., 2006, Barth et al., 2008), we contribute to this assessment by examining whether bank regulation, supervision and monitoring enhance or impede bank operating efficiency. Based on an un-balanced panel analysis of 4050 banks observations in 72 countries over the period 1999–2007, we find that tighter restrictions on bank activities are negatively associated with bank efficiency, while greater capital regulation stringency is marginally and positively associated with bank efficiency. We also find that a strengthening of official supervisory power is positively associated with bank efficiency only in countries with independent supervisory authorities. Moreover, independence coupled with a more experienced supervisory authority tends to enhance bank efficiency. Finally, market-based monitoring of banks in terms of more financial transparency is positively associated with bank efficiency.