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Tax Incidence on Competing Two-Sided Platforms: Lucky Break or Double Jeopardy

Paul Belleflamme () and Eric Toulemonde

No 5882, CESifo Working Paper Series from CESifo Group Munich

Abstract: We consider the effects of taxes for competing two-sided platforms. We first detail how a platform passes a tax increase on its prices. Adding price competition, we study next how the tax affects profits. Because of the strategic implications of the cross-side external effects, the tax increase may end up increasing the profit of the taxed platform (lucky break) or, conversely, reducing it twice (double jeopardy).

Keywords: two-sided platforms; taxation; pass-through (search for similar items in EconPapers)
JEL-codes: D43 L13 L86 O32 (search for similar items in EconPapers)
Date: 2016
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