Do Consumers Buy Less of a Taxed Good?

Hans Jarle Kind (), Marko Köthenbürger () and Guttorm Schjelderup ()
Authors registered in the RePEc Author Service: Marko Koethenbuerger

No CESifo Working Paper No. 1635, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper shows that consumers may buy more of a taxed good if it is sold by a two-sided platform firm. Two-sided platform industries serve distinct customer groups that are connected through interdependent demand, and include major businesses such as the media industry (newspapers/magazines and advertisers), banking (cardholder and merchant), and the software industry (users and application developers). The paper compares ad-valorem and specific taxes and shows that they may have opposite effects on quantities sold, and that the ad-valorem tax - the most commonly used tax throughout the OECD - has effects on prices and quantities not previously recognized.

Keywords: two-sided markets; ad-valorem taxes; specific taxes (search for similar items in EconPapers)
JEL-codes: D40 D43 H21 H22 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mic, nep-pbe and nep-pub
Date: 2005
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