Production efficiency and profit taxation

Stephane Gauthier and Guy Laroque

Social Choice and Welfare, 2019, vol. 52, issue 2, No 2, 215-223

Abstract: Abstract Consider a simple general equilibrium economy with one representative consumer, a single competitive firm and the government. Suppose that the government has to finance public expenditures using linear consumption taxes and/or a lump-sum tax on profits redistributed to the consumer. We show that, if the tax rate on profits cannot exceed $$100\%$$ 100 % , one cannot improve upon the second-best optimum of an economy with constant returns to scale by using a less efficient profit-generating decreasing returns to scale technology.

Date: 2019
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Working Paper: Production efficiency and profit taxation (2019)
Working Paper: Production efficiency and profit taxation (2019)
Working Paper: Production efficiency and profit taxation (2019)
Working Paper: Production efficiency and profit taxation (2018)
Working Paper: Production Efficiency and Profit Taxation (2017)
Working Paper: Production Efficiency and Profit Taxation (2017)
Working Paper: Production Efficiency and Profit Taxation (2017)
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DOI: 10.1007/s00355-018-1144-2

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