Optimal Educational Investment: Domestic Equity and International Competition

Table 2

Optimal rates of tax and education under various parameter assumptions in the international model.

	Model	𝜏^∗	𝜆^∗	𝑊^∗
𝛿=1	Nash; Cooperative	0.03; 0.03	0.1787; 0.1787	1.0326; 1.0326
𝛿=2	Nash; Cooperative	0.08; 0.07	0.3111; 0.2895	1.1129; 1.1135
𝛿=3	Nash; Cooperative	0.12; 0.11	0.4090; 0.3894	1.2268; 1.2271

Notes. Throughout it is assumed that 𝛾=1, 𝛽=2.5, 𝜃=0.5, and 𝑌₀=1. The value of welfare is reported as a per capita measure.