A Reexamination of the Price Effects of a Unit Commodity Tax Under Perfect Competition and Monopoly

Elchanan Cohn
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Elchanan Cohn: University of South Carolina

Public Finance Review, 1996, vol. 24, issue 3, 391-396

Abstract: Musgrave, m his Theory of Public Finance, argues that the pnce effect of a unit tax Abstract under monopoly is one half the effect under competition when demand and supply curves are linear. It is shown here that this rule applies only for the constant-cost case. For an increasing supply (marginal cost) schedule, the effect for monopoly is smaller than under competition, but by a factor less than 2.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:24:y:1996:i:3:p:391-396

DOI: 10.1177/109114219602400305

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