A similar result by Diamond and Mirrlees showed that for flexible economies, these should always allow maintaining output along the production possibilities frontier.
Hurwicz and Walker proposed incentive-compatible mechanisms for achieving a form of this concept proposed by Lindhal. In an infinite time horizon, assuming that utility functions have weak separability in consumption and leisure, these should be homogenous according to the Atikinson-Stiglitz theorem. That result was extended to suggest that assuming homogenous discount rates, one form of these should be zero for infinite horizons according to the Chamley-Judd theorem. A similar result by Diamond and Mirrlees showed that for flexible economies, these should always allow maintaining output along the production possibilities frontier. Constraints on maintaining utility and profits while applying these were the earliest formulation of the Ramsey problem, giving rise to the "optimal" analysis of these entities, which can hurt those with a high marginal propensity to consume. For 10 points, name these distortions that come in lump-sum and value-added varieties, and can be levied on income.
Hurwicz and Walker proposed incentive-compatible mechanisms for achieving a form of this concept proposed by Lindhal.
taxes [or taxation; or tax rates; accept Lindahl tax until "Lindahl"; accept "optimal tax" at any point]