Production efficiency and excess supply

Leslie Reinhorn

No 2011_13, Department of Economics Working Papers from Durham University, Department of Economics

Abstract: This paper demonstrates that intermediate goods should not be taxed even in the presence of dividend payments to households, thus clarifying previous results. We also find that optimal government policy in a second best world may include stockpiles of output - private supply exceeds private demand, and the government purchases the surplus. This may provide a possible explanation for some agricultural policies.

Keywords: production efficiency; excess supply; optimal taxation; non-tight equilibrium; price supports (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Date: 2011-11-01
New Economics Papers: this item is included in nep-pub
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Citations: View citations in EconPapers (3)

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Journal Article: Production efficiency and excess supply (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:dur:durham:2011_13

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