Consumption taxes in monopolistic competition: A comment created by Henrik Vetter

By:

Vetter Henrik [author]

Material type: Text

TextSeries: Journal of Economics ; Volume 110, number 3Heidelberg: Springer, 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

09318658

Subject(s):

Unit taxes -- Monopolistic competition -- Mark-up pricing

LOC classification:

HB171.5 JOU

Online resources:

Click here to access online

Abstract: We show that an ad valorem tax is better than an equal-revenue unit tax when consumers spend some fixed proportion of income on taxed goods, when firms use constant mark-up pricing, and entry and exit drive per-firm profit to zero. These key assumptions implies that ad valorem taxes are superior in oligopoly as well as monopolistic competition, showing that earlier results on taxes in monopolistic competition (Schröder in J Econ 83(3):281–292, 2004) are not due to the mode of competition, but rather are due to the functional forms used.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB171.5 JOU (Browse shelf(Opens below))	Vol. 110, no. 3 (pages287-296)	SP21441	Not for loan	For In house Use

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We show that an ad valorem tax is better than an equal-revenue unit tax when consumers spend some fixed proportion of income on taxed goods, when firms use constant mark-up pricing, and entry and exit drive per-firm profit to zero. These key assumptions implies that ad valorem taxes are superior in oligopoly as well as monopolistic competition, showing that earlier results on taxes in monopolistic competition (Schröder in J Econ 83(3):281–292, 2004) are not due to the mode of competition, but rather are due to the functional forms used.

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