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15-10 The Roman empire taxed many faraway provinces. Rome would auction the rights to tax
collection to the highest bidder. The winning bidder was given the right to set the tax rate for the
province and the right to collect (and keep) the taxes. In turn, the winner will pay the bid amount
to the Roman government. Assume (1) that the Roman senate is interested in maximizing the
present value of all future revenues to Rome from auctioning off the tax rights, and (2) that the
auction for the right to each province is conducted annually.
a. Give two reasons Rome would auction off the right to tax collection rather than simply send a
Roman soldier to collect the taxes.
b. Discuss two problems this system might generate for the senate.

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