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Unit Versus Ad Valorem Taxes: The Private Ownership of Monopoly In General Equilibrium

Charles Blackorby and Sushama Murty ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: In an earlier paper [Blackorby and Murty; 2007] we showed that if a monopoly sector is imbedded in a general equilibrium framework and profits are taxed at one hundred percent, then unit (specific) taxation and ad valorem taxation are welfare-wise equivalent. In this paper, we consider private ownership of the monopoly sector. Given technical difficulties in making a direct general equilibrium comparison of unit and ad valorem taxation, we adopt a technique due to Guesnerie [1980] and Quinzii [1992] in a somewhat different context of increasing returns and non-convex economies to show that neither ad valorem taxation nor unit taxation Pareto dominates the other; although, generally, the two are not welfare-wise equivalent.

Keywords: Ad valorem taxes; unit taxes; monopoly (search for similar items in EconPapers)
JEL-codes: H21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Unit Versus Ad Valorem Taxes: The Private Ownership of Monopoly in General Equilibrium (2013) Downloads
Working Paper: Unit Versus Ad Valorem Taxes: The Private Ownership of Monopoly In General Equilibrium (2010) Downloads
Working Paper: Unit Versus Ad Valorem Taxes: The Private Ownership of Monopoly In General Equilibrium (2008) Downloads
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