X is x*(py) > x*(py) > x*(y)

If this is the case then why is

B(x*(py))-x*(py)y > B(x*(py))-x*(py)y

Since the first equation that has is smaller but in second equation with the is smaller.

TAXATION VERSUS LIABILITY 275 The intuition supporting the first claim is that liability is a superior incentive to the tax because only under liability do expected payments reflect an individual injurer's expected harm y. To dem- onstrate the claim, assume first that f = 0. Then if A x(py) > x (y). From this and the concavity of b(x) - xy in x, we have b(x (py)) - x'(py)y > b(x'(Xpy)) - x'(Xpy)y. Hence, Wyz is higher at A = 1 than at A