A Pareto comparison of ad valorem and unit taxes in noncompetitive environments

Skeath, Susan; Trandel, Gregory A.

doi:10.1016/0047-2727(94)90013-2

“…Thus one might expect consumer prices to be lower under ad valorem than under specific taxation. Indeed, it is possible to show, in the monopoly case, that replacing a specific tax, t s , by its ad valorem equivalent, t a =t s /p, causes consumer prices to fall and tax revenue and monopoly profits to rise (Skeath and Trandel, 1994). So everyone gains from ad valorem taxationexcept the public health advocate.…”

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confidence: 99%

Tobacco Taxation in the European Union

Cnossen¹

2006

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may

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“…treatments, see Delipalla and Keen (1992) and Skeath and Trandel (1994), though the latter paper is subject to the usual criticisms associated with the use of a partial equilibrium framework for the study of a tax problem. The …rst result in favor of ad valorem appears to be Wicksell (1959) (originally published in 1896) who considered the case of monopoly under partial equilibrium.…”

Section: Modelmentioning

confidence: 99%

Optimal Taxation with Cournot Oligopoly

Reinhorn

¹

2005

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper studies optimal linear taxation in a general equilibrium model with Cournot oligopoly. The main result is the following. With imperfect competition the tendency toward "inverse elasticities" tax rules will be weakened and may even be reversed. That is, an upward sloping relationship may exist between an industry's optimal tax rate and its own-price elasticity of demand, unlike the perfectly competitive case.

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“…Suits and Musgrave (1953) show that tax revenues resulting from a unit tax are lower than from an ad valorem tax, assuming tax rates which induce a monopolist to produce the same output. Skeath and Trandel (1994a), furthermore, make clear that the ad valorem tax Pareto-dominates a specific tax of equal yield. The analyses have been extended to monopolistic competition (Cheung 1998;Schröder 2004), oligopolies (Delipalla and Keen 1992;Denicolò and Matteuzzi 2000), and to frameworks in which firms can become informal and will then not pay taxes (Delipalla 2009a, b).…”

Section: Introductionmentioning

confidence: 99%

Commodity tax structure under uncertainty in a perfectly competitive market

Goerke

¹

2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In a partial equilibrium setting without price uncertainty, the balanced-budget substitution of an ad valorem tax on output for a specific (unit) tax can enhance welfare in imperfectly competitive markets and is without impact in a competitive world. This paper demonstrates that a substitution of this kind can also increase expected output and welfare in a competitive market characterised by uncertainty about the commodity price, if firms can respond to the revelation of demand conditions by altering output. Terms of use: Documents in EconStor mayJEL-Code: H210, H250.

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A Pareto comparison of ad valorem and unit taxes in noncompetitive environments

Cited by 131 publications

References 15 publications

Tobacco Taxation in the European Union

Tobacco Taxation in the European Union

Optimal Taxation with Cournot Oligopoly

Commodity tax structure under uncertainty in a perfectly competitive market

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