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[eng] Price adjustments in response to varying levels of indirect taxation depend on the nature of market competition, but also on whether the tax in question rises or falls. A first asymmetric effect is linked to production adjustment costs or credit constraints, which result in asymmetrical supply flexibility, giving rise in turn to asymmetrical price adjustments because it is more expensive to increase than to cut production. The quantity exchanged increases less after a fall in indirect taxation than after a rise, so prices adjust more strongly upwards than downwards. In principle, therefore, prices in competitive markets should shift further upwards than downwards. The second effect is linked to consumer demand: consumers react in a more pronounced way to higher price variations both because they are more obvious and because of the costs involved in changing their consumer habits. Consequently, oligopolistic companies, which can influence prices, reduce price rises in order to minimise falls in consumption and accentuate price cuts to create a promotional effect. In imperfectly competitive markets, the latter effect tends to offset the former. The fact that companies in competitive markets increase their prices more than companies in oligopolies is no paradox if we remember that perfect competition reduces prices in the first place, thus ruling out large reductions. Conversely, oligopolistic companies use their profit margins to finance promotional effects by minimising price rises and increasing reductions. However, these two theoretical effects, tested and validated using French data from the analysis of the 1995 and 2000 reforms of the top VAT rate, are short-term effects: the adjustment costs are temporary and the promotional effects evaporate over time. Differing Price Adjustments to Rises and Falls in VAT Rates: An Empirical Analysis Based on the 1995 and 2000 French Reforms [fre] L’ajustement des prix aux variations de taxes indirectes dépend des caractéristiques de la concurrence sur les marchés, mais également du sens de variation de la taxe. Un premier effet d’asymétrie est lié à l’existence de coûts d’ajustement des productions ou de contraintes de crédit qui induisent une asymétrie de l’élasticité de l’offre, d’où résulte une asymétrie de l’ajustement des prix. Parce qu’il est plus coûteux d’augmenter que de réduire sa production, la quantité échangée augmente moins après une baisse de taxes indirectes qu’elle ne diminue après leur hausse, et ainsi les prix s’ajustent plus fortement à la hausse qu’à la baisse. Les ajustements de prix sur des marchés compétitifs sont donc a priori plus forts à la hausse qu’à la baisse. Le second effet est lié à la demande des consommateurs qui réagissent plus fortement à de plus fortes variations de prix pour des raisons de visibilité de ces dernières, ou de coût de changement de leurs habitudes de consommation. Dès lors les entreprises oligopolistiques, qui ont un pouvoir sur les prix, atténuent les hausses de prix pour minimiser les chutes de consommation et acc...

Economic theory states that in a market with imperfect competition, per unit consumption taxes should induce a greater increase in prices than ad valorem consumption taxes. This implies that consumers bear a greater share of the tax burden with per unit consumption taxes than that with ad valorem consumption taxes. This article seeks to test this theoretical result empirically using the French market for alcoholic beverages, which is subject to both per unit (excise taxes) and ad valorem (value-added tax, VAT) consumption taxes. Econometric analysis is applied to two consumption tax reforms affecting two distinct French markets for alcoholic beverages, those for beer and for aperitif. In 1995, the full rate of VAT increased from 18.6 to 20.6%; excise taxes on alcoholic beverages increased in 1997. Graphical evidence and econometric results confirm the statements of economic theory. For both classes of alcoholic beverages – beer and aperitif – the change in prices due to per unit excise taxes was significantly larger than that due to ad valorem VAT.