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Multi‐part tariffs and differentiated commodity taxation

Anna D'Annunzio, Mohammed Mardan () and Antonio Russo ()

RAND Journal of Economics, 2020, vol. 51, issue 3, 786-804

Abstract: We study commodity taxation in markets where firms, such as Internet Service Providers, energy suppliers, and payment card platforms, adopt multi‐part tariffs. We show that ad valorem taxes can correct underprovision and hence increase welfare, provided the government applies differentiated tax rates to the usage and access parts of the tariff. We obtain this result in different settings, including vertically interlinked markets, markets where firms adopt menus of tariffs to screen consumers, and where they compete with multi‐part tariffs. Our results suggest that exempting these markets from taxation may be inefficient.

Date: 2020
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https://doi.org/10.1111/1756-2171.12340

Related works:
Working Paper: Multi-Part Tariffs and Differentiated Commodity Taxation (2019) Downloads
Working Paper: Multi-part Tariffs and Differentiated Commodity Taxation (2019) Downloads
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