Taxing and Regulating Vices

Anna Maria Menichini, Giovanni Immordino and Maria Romano

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We study the sin taxes and regulatory measures that it is optimal to implement when consumers are time-inconsistent and there are inefficiencies associated with the use of either instrument. For high inefficiency of regulation, only taxation is used and it may be higher or lower than the first-best depending on the price elasticity of demand. For high inefficiency of taxation, only regulation is used to an extent which depends on its effectiveness in terms of quantity reduction relative to the disutility it generates. For moderate inefficiency of either instrument, taxation and regulation are both optimally used.

Keywords: Hyperbolic preferences; Taxation; Regulation; Consumption restrictions; Sin goods (search for similar items in EconPapers)
JEL-codes: D03 H21 L51 (search for similar items in EconPapers)
Date: 2016-03-25
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Forthcoming in Scandinavian Journal of Economics

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http://www.csef.it/WP/wp434.pdf (application/pdf)

Related works:
Journal Article: Taxing and Regulating Vices (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:434

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