Commodity Tax Structure under Uncertainty in a Perfectly Competitive Market

Laszlo Goerke

No 3339, CESifo Working Paper Series from CESifo

Abstract: In a partial equilibrium setting without price uncertainty, the balanced-budget substitution of an ad valorem tax on output for a specific (unit) tax can enhance welfare in imperfectly competitive markets and is without impact in a competitive world. This paper demonstrates that a substitution of this kind can also increase expected output and welfare in a competitive market characterised by uncertainty about the commodity price, if firms can respond to the revelation of demand conditions by altering output.

Keywords: ad valorem tax; commodity taxation; perfect competition; uncertainty; unit tax (search for similar items in EconPapers)
JEL-codes: H21 H25 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (16)

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Journal Article: Commodity tax structure under uncertainty in a perfectly competitive market (2011)
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