This paper tests a multiple principal–agent model of the Internal Revenue Service. Using data for 33 IRS districts over six tax years, 1992–1997, we report evidence that the fraction of individual income tax returns audited is significantly lower in districts that are important to the president electorally and that have representation on key congressional committees. These findings suggest that the IRS is not a rogue government agency, but rather is an effective bureaucratic agent of its political sponsors. “Reforming” the IRS by subjecting it to an independent oversight board appointed by the president would therefore seem to be redundant.

Participants in a special election held in the State of Georgia on 2 March 2004 voted overwhelmingly in favor of adopting a newly designed state flag that no longer incorporated a divisive Confederate symbol. We analyze the legislative politicking that defined the voters’ options as well as the outcome of popular voting on the flag design across Georgia’s 159 counties. We find the referendum’s results to have been determined largely by demography (education, race, and population density) and by the level of support in 2002 for the two gubernatorial candidates who played significant roles in the flag controversy. Copyright Springer Science+Business Media, LLC 2007

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Innovation enables monopolists to lower their costs, expand their outputs, and reduce their prices. It is conventional to conclude that social welfare unambiguously increases as a result. Assuming linear demand and marginal cost, this paper shows, however, that innovation raises the opportunity cost of monopoly: as a firm enjoying market power becomes more efficient, greater amounts of surplus are sacrificed by consumers because of the progressive monopolist's failure to produce the new, larger competitive output. Innovation, in other words, increases the social value of competition by raising the deadweight cost of monopoly. Copyright © 2008 John Wiley & Sons, Ltd.

Antitrust, Public choice, Real business cycles, D72, L40, K21, E61,