The Optimal Taxation Theory Revisited: The Case of Inverse Demands

Hoanjae Park and Kun-Ha Hwang
Additional contact information
Hoanjae Park: Catholic University of Daegu
Kun-Ha Hwang: Catholic University of Daegu

Korean Economic Review, 2000, vol. 16, 431-450

Abstract: This paper reformulates the optimal commodity taxation theory which is based on the distance function. It enables the change in the marginal rate of substitution between goods to be broken into scale effects and substitution effects in quantity space. An inverse demand system with these effects is constructed as a first attempt in the literature, extending Deaton's idea to the directly estimable inverse demand system. In addition, the dependence of theoretical results of the optimal taxes on the specification of market behaviors is examined following Fullerton. It suggests that reform of optimal taxation be influenced by the choice of market condition, which specifies either traditional demand systems or inverse demand systems.

Keywords: Optimal Taxation; Inverse Demand; Tax Reform; Marginal Welfare Cost (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations:

Downloads: (external link)
http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-200012-16-2-13.pdf (application/pdf)

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:kea:keappr:ker-200012-16-2-13

Access Statistics for this article

Korean Economic Review is currently edited by Kyung Hwan Baik

More articles in Korean Economic Review from Korean Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by KEA ().