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Multi-Part Tariffs and Differentiated Commodity Taxation

Anna D'Annunzio, Mohammed Mardan and Antonio Russo

No 7852, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study commodity taxation in markets where firms, such as Internet Service Providers, energy suppliers and payment card platforms, adopt multi-part tariffs. We show that ad valorem taxes can correct underprovision and hence increase welfare, provided the government applies differentiated tax rates to the usage and access parts of the tariff. We obtain this result in different settings, including vertically interlinked markets, markets where firms adopt menus of tariffs to screen consumers and where they compete with multi-part tariffs. Our results suggest that exempting these markets from taxation may be inefficient.

Keywords: commodity taxation; multi-part tariffs; price discrimination (search for similar items in EconPapers)
JEL-codes: D42 D61 H21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-reg
Date: 2019
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