Tax Liability‐Side Equivalence in Experimental Posted‐Offer Markets

Rainald Borck, Dirk Engelmann, Wieland Müller and Hans‐Theo Normann

Southern Economic Journal, 2002, vol. 68, issue 3, 672-682

Abstract: In theory, the incidence of a tax should be independent of the side of the market on which it is levied. This principle of liability‐side equivalence underlies virtually all theories of tax incidence. Policy discussions, however, tend to place great emphasis on the legal division of tax payments. We use computerized experimental posted‐offer markets to test liability‐side equivalence. We find that market outcomes are essentially the same when the tax is levied on sellers as when it is levied on buyers. Thus, we cannot reject liability‐side equivalence.

Date: 2002
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https://doi.org/10.1002/j.2325-8012.2002.tb00445.x

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Working Paper: Tax liability side equivalence in an experimental posted offer market (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:68:y:2002:i:3:p:672-682

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