Taxation of a Digital Monopoly Platform

Marc Bourreau, Bernard Caillaud (bernard.caillaud@psemail.eu) and Romain de Nijs
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Bernard Caillaud: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Romain de Nijs: X - École polytechnique - IP Paris - Institut Polytechnique de Paris

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Abstract: This paper investigates the impact on fiscal revenues of taxing a two-sided mo-nopolistic platform offering personalized services to users and targeted advertising to sellers, based on the collection of users' personal data. We show that the introduction of a small tax on data collection, which has been proposed in the French context by Colin and Collin (2013), fails to increase fiscal revenues if the value added tax (VAT) rate is high enough, due to a tax base interdependence effect between the two taxes. Under a supermodularity condition on the platform's profit function as a function of its prices, this result generalizes to any per-unit tax. However, in some cases, an ad valorem tax on subscriptions or on advertising may raise fiscal revenues, irrespective of the VAT rate, as well as welfare.

Keywords: two-sided market; digital economy; online advertising; data (search for similar items in EconPapers)
Date: 2016-10-25
New Economics Papers: this item is included in nep-mkt
Note: View the original document on HAL open archive server: https://polytechnique.hal.science/hal-01387357v1
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Related works:
Journal Article: Taxation of a digital monopoly platform (2018)
Working Paper: Taxation of a digital monopoly platform (2018)
Working Paper: Taxation of a digital monopoly platform (2018)
Working Paper: Taxation of a Digital Monopoly Platform (2016)
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