Externality of Sales Activities and Policy Effectiveness

Masanori Takaoka ()
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Masanori Takaoka: Graduate School of Economics, Osaka University

No 14-29, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Externalities exist when companies perform sales activities (e.g., advertising and sales promotions). However, welfare analysis of policy effectiveness, such as taxation/regulation on sales activities, has not been sufficiently conducted. Existing studies have mainly focused on specifying the deviation factors of sales activities from the socially optimum level, so the influences of tax policies on corporate activities have not been analyzed. Moreover, changes of extrinsic factors should be studied to determine the effectiveness of restrictive regulatory policies. This study extends the conventional methods of analysis at these points and analyzes the interactive effects of six types of policies composed of taxation and regulations: (1) selling expense taxes, (2) ad-valorem duties, (3) specific duties, (4) sales restrictions, (5) price controls, and (6) quantity restrictions. As a result, I propose as effective policies two types of policy mixes: (a) taxation (selling expense, ad valorem, and specific duties) and price cap regulation and (b) taxation (ad valorem and specific duties) and sales activity regulation.

Keywords: Sales activity; Advertising; Sales promotion; Taxation; Regulation (search for similar items in EconPapers)
JEL-codes: H21 H23 H25 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014-08
New Economics Papers: this item is included in nep-mkt and nep-pbe
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