The standard microeconomic analysis of taxation suggests that excise taxes on goods with a price-inelastic demand are more efficient in that they lead to a lower deadweight loss than taxes on goods with price-elastic demand. This argument ignores secondary effects on the rest of the economy. By narrowly focusing on the primary effects on the market where the tax is raised, the overall deadweight loss is underestimated when demand is price-inelastic. Moreover, it is overestimated when demand is price-elastic. This puts (...) into question the validity of the standard textbook argument. In this paper we address this issue by considering how taxes affect consumer behavior in other markets. From this we can clearly see how the impact of an excise tax is not limited to one market in isolation, but is spread over all markets and affects the demand for cash balances. We suggest a simple way to incorporate this important insight into a standard textbook exposition. (shrink)

How accurate is Kevin Carson’s characterization of “freed” markets? Carson, a left-libertarian “free market anti-capitalist,” portrays free markets as so radically different from actually-existing markets that they are almost unrecognizable. In The Homebrew Industrial Revolution: A Low Overhead Manifesto, he provides an alternative history of industrialization that argues that large-scale industrial organization and production are largely creatures of state intervention and that truly free markets would be characterized mainly by small-scale production for local markets. This paper evaluates Carson’s narrative in (...) order to determine whether his vision of the freed market is credible. I find that Carson fails to provide sufficient evidence to demonstrate that, but for government intervention, national markets would only exist for a few goods. Furthermore, many of the features he believes freed markets would possess are based on fallacious views of competition, knowledge, capital, and entrepreneurship. (shrink)

In the present paper we argue that the theory of contracts embraced by many libertarian scholars and relied upon by them in sundry important debates (e.g. over morality of the fractional reserve banking or loan maturity mismatching etc.), that is, the title transfer theory of contracts (TTT) should be rejected as not being able to account for the binding force of future-oriented contracts, including contracts deemed enforceable by those scholars themselves. The TTT claims that the only contracts that should be (...) legally binding are these where the debtor’s failure to abide by them constitutes a violation of the creditor’s private property rights. However, as we argue, no default of the debtor in a future-oriented contract can in itself amount to such a violation. (shrink)