The Incidence of Non-Linear Consumption Taxes
No 2013-19, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise
The present article generalyses economic litterature on consumption tax incidence to general forms of consumption taxes. Previous studies were limited to the cases of per unit and ad valorem taxes. Three main contributions are provided. From a methodological point of view, the elasticity of the tax function is introduced as a new parameter to take the shape of general consumption tax schedules into account in different models of imperfect competition in a tractable manner. From a theoretical point of view, existing results on the difference of incidence of ad valorem and per unit consumption taxes are generalized to non-linear consumption taxes: the larger the elasticity of the tax function the weaker the share of the consumption tax beared by consumers. From anapplied public economic point of view, it is shown how the regulator may put downwards prices on very uncompetitive markets by increasing the elasticity of the consumption tax on a targeted window of producer prices.
Keywords: Consumption taxes; Imperfect Competition; Tax Incidence; Efficiency. (search for similar items in EconPapers)
JEL-codes: H21 H22 H24 H32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
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Journal Article: The incidence of non-linear consumption taxes (2014)
Working Paper: The Incidence of Non-Linear Consumption Taxes (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2013-19
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