A new version of Edgeworth's taxation paradox

Robert Ritz

No 502, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Edgworth's taxation paradox states that an excise tax can decrease the market price of a good. This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market. The paper also presents two new applications: (i) an emissions tax that leads to an increase in industry emissions (due to entry), and (ii) an interest rate cut by the central bank that reduces lending by commercial banks (due to exit). Basic principles of environmental regulation and monetary policy therefore fail under the conditions of the paradox.

Keywords: Bank lending; Cost pass-through; Edgeworth's paradox; Environmental regulation; Market structure; Taxation (search for similar items in EconPapers)
JEL-codes: D43 G21 H22 Q50 (search for similar items in EconPapers)
Date: 2010-08-01
New Economics Papers: this item is included in nep-acc, nep-ene, nep-env, nep-ind, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:9ceecd4c-ba03-4805-8d81-6b9badda9ccf (text/html)

Related works:
Journal Article: A new version of Edgeworth's taxation paradox (2014)
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:oxf:wpaper:502

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).