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![A simple economy: government
Taxes output of formal households at rate τ ∈ [0, 1].
Impossible to tax or impose penalty to...](https://image.slidesharecdn.com/mariosolis-garcia-131219060437-phpapp01/75/trust-in-government-and-policy-effectiveness-6-2048.jpg?cb=1670455874)
![Results
Result 2
If λ ∈ (0, 1], households with productivity higher that some cutoff will
operate formal technology. Cutoff...](https://image.slidesharecdn.com/mariosolis-garcia-131219060437-phpapp01/75/trust-in-government-and-policy-effectiveness-12-2048.jpg?cb=1670455874)
