Salience and Taxation with Imperfect Competition

Kory Kroft, Jean-William Laliberté, René Leal-Vizcaíno and Matthew Notowidigdo

No 27409, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies commodity taxation in a model featuring heterogeneous consumers, imperfect competition, and tax salience. We derive new formulas for the incidence and marginal excess burden of commodity taxation, and we find that tax salience and market structure interact when considering tax incidence but do not directly interact when considering the marginal excess burden. We estimate the necessary inputs to the formulas by combining Nielsen Retail Scanner data from grocery stores in the US with detailed sales tax data. We calibrate our new formulas and conclude that the incidence of sales taxes on consumers is increasing in tax salience, and the marginal excess burden of taxation is larger than standard formulas that ignore imperfect competition and tax salience.

JEL-codes: D12 H2 H25 H71 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-ore, nep-pbe and nep-pub
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Kory Kroft & Jean-William Laliberté & René Leal-Vizcaíno & Matthew J Notowidigdo, 2024. "Salience and Taxation with Imperfect Competition," Review of Economic Studies, vol 91(1), pages 403-437.

Downloads: (external link)
http://www.nber.org/papers/w27409.pdf (application/pdf)

Related works:
Journal Article: Salience and Taxation with Imperfect Competition (2024)
Working Paper: Salience and Taxation with Imperfect Competition (2022)
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:nbr:nberwo:27409

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w27409

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().