EconPapers    
Economics at your fingertips  
 

Vertical integration and production inefficiency in the presence of a gross receipts tax

Benjamin Hansen, Keaton Miller and Caroline Weber

Journal of Public Economics, 2022, vol. 212, issue C

Abstract: We quantify the effects of a gross receipts tax (GRT) on vertical integration for the first time. We use data from the Washington state recreational cannabis industry, which has numerous advantages including a clean natural experiment: a 25% GRT imposed on cannabis firms was subsequently replaced by an excise tax at retail. We find the short-run elasticity of vertical integration with respect to the intermediate good net-of-tax rate is −0.15 and the long-run elasticity is about twice as large. We find these incentives lead to large output losses – production increases by 23 percent when the GRT is eliminated.

Keywords: Gross receipts tax; Turnover tax; Vertical integration; Natural experiment; Cannabis; Excise tax (search for similar items in EconPapers)
JEL-codes: H25 H32 H71 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272722000950
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:212:y:2022:i:c:s0047272722000950

DOI: 10.1016/j.jpubeco.2022.104693

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-11-12
Handle: RePEc:eee:pubeco:v:212:y:2022:i:c:s0047272722000950