Taxation on duopoly e-commerce platforms and their search environments

Sangita Poddar (), Tanmoyee Banerjee(Chatterjee) () and Swapnendu Banerjee (Bandyopadhyay)
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Sangita Poddar: Jadavpur University
Tanmoyee Banerjee(Chatterjee): Jadavpur University

SN Business & Economics, 2023, vol. 3, issue 8, 1-20

Abstract: Abstract The paper studies the issue of tax incidence for duopoly e-commerce platforms where buyers evaluate two platforms before making any purchase, and platforms provide a favourable environment for smooth and effortless search process. We determine optimal level of prices and search environments by constructing a simple game-theoretic model. Sensitivity analysis is conducted to derive the effects of change in tax on search environment and prices paid by consumers. Both the platforms improve their search environments in response to increase in tax rate. The comparison of market equilibrium with social optimum indicates that duopoly e-commerce platforms provide lower level of search environments compared to social optimum level for a same level of tax.

Keywords: E-commerce platform; Search environment; Social welfare; Tax incidence (search for similar items in EconPapers)
JEL-codes: D21 H21 L22 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43546-023-00509-1

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