Examples of unit tax superiority for a price-discriminating monopolist

Francisco Galera (), José Luis Álvarez () and Isabel Rodriguez-Tejedo ()

International Tax and Public Finance, 2016, vol. 23, issue 1, 158-167

Abstract: This paper compares the welfare effects of per-unit and ad valorem taxes in four pervasive price discrimination schemes: quantity discounts, two-part tariffs, bundling, and package size price discrimination. The paper shows by example that per-unit taxes may welfare dominate ad valorem tariffs in a market with a monopoly that maximizes profits by engaging in second-degree price discrimination. Copyright Springer Science+Business Media New York 2016

Keywords: Monopoly; Second-degree price discrimination; Unit taxes; Ad valorem taxes; D42; H21; L12 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10797-015-9353-4

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