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Links to econ—requires taxes which distort the economy
Shavell & Van Ypersele 01 (Steven Shavell, Harvard Law School and National Bureau of Economic Research and Tanguy Van Ypersele, University of Namur and Catholic University of Louvain, “REWARDS VERSUS INTELLECTUAL PROPERTY RIGHTS*,” “Harvard Law Review, The Journal of Law and Economics,” originally published by The University of Chicago. Vol XLIV. URL: http://www.law.harvard.edu/faculty/shavell/pdf/44_J_Law_Econ_525.pdf, October 2001)//NTG
Reward systems have to be financed, and we presume through income taxation, but that involves a labor supply–related distortionary cost, something that was not considered in our model.45 Hence, the potential case for reward is less strong than is suggested by our analysis.
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