A Note on Tanneries in Kanpur, Water Pollution in the Ganges, Taxation, and Tax Shifting

Amitrajeet Batabyal

MPRA Paper from University Library of Munich, Germany

Abstract: In this note, we provide the first game-theoretic analysis of taxation and tax shifting when tanneries in Kanpur, India, that produce leather and pollute the Ganges River are taxed. We model the n≥2 tanneries as a Cournot oligopoly and a specific tax τ>0 is imposed on each unit of leather produced by the polluting tanneries. We first determine the symmetric Nash equilibrium output of leather and its price with the tax. Second, we show that the rate of tax shifting by the polluting tanneries is constant. Third, we discuss how increasing either the number of tanneries or the price elasticity of demand affects the tax shifting that takes place. Finally, we comment on the policy implications of constant tax shifting such as the predictability of the incidence of the tax burden.

Keywords: Ganges River; Tannery; Specific Tax; Tax Shifting; Water Pollution (search for similar items in EconPapers)
JEL-codes: H22 H23 Q25 (search for similar items in EconPapers)
Date: 2025-02-09, Revised 2025-08-17
New Economics Papers: this item is included in nep-acc, nep-env, nep-gth, nep-mac and nep-pbe
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