What Determines the Optimal Commodity Tax Structure from an Intuitive Point of View?

Knud Munk

No 02-17, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: The paper provides an intuitive explanation – seen from an efficiency point of view – of the optimal commodity tax structure as the result of a trade-off between two objectives: 1) the objective of maintaining the first-best pattern of consumption of produced commodities, and 2) the objective of not discouraging the supply of labour. It supports this insight using a utility function with the explicit representation of the use of time, and using a functional form based on this utility function, which has sufficient flexibility not to predetermine the outcome of tax simulations, contrary to commonly employed functional forms which impose separability between consumption and leisure. The paper supplements the work of Atkinson and Stern (1980, 1981) by generalising the parameterised functional form they consider, and by pointing out the optimal tax implication of their analysis. It supplements the work by Sandmo (1990) and others by applying standard results to the analysis of optimal taxation with home production, facilitating the derivation of results and their interpretation, and thus helping to clarify certain conceptual ambiguities.

References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://web.econ.ku.dk/epru/files/wp/wp-02-17.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://web.econ.ku.dk/epru/files/wp/wp-02-17.pdf [301 Moved permanently]--> https://web.econ.ku.dk/epru/files/wp/wp-02-17.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:epruwp:02-17

Access Statistics for this paper

More papers in EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics �ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().