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| Content Provider | Springer Nature Link |
|---|---|
| Author | Dröge, Susanne Schröder, Philipp J. H. |
| Copyright Year | 2008 |
| Abstract | The ad valorem versus unit tax debate has traditionally emphasized tax yield. On this criterion, ad valorem taxes outperform unit taxes in terms of welfare for a wide range of imperfect competition settings including Dixit–Stiglitz monopolistic competition. However, in a number of policy fields such as environmental, health, and trade economics, policy makers use taxes to reduce the production/consumption volume in an industry, i.e., to correct an externality rather than to improve tax yield. This paper compares the two tax instruments with respect to equal corrective effect in a Dixit–Stiglitz setting with love of variety, entry, exit, and redistribution of tax revenues. We find that unit taxes lead to more firms in the industry, less output per firm, less tax revenue, but higher welfare compared to ad valorem taxes. |
| Ending Page | 175 |
| Page Count | 12 |
| Starting Page | 164 |
| File Format | |
| ISSN | 09275940 |
| e-ISSN | 15736970 |
| Journal | International Tax and Public Finance |
| Issue Number | 2 |
| Volume Number | 16 |
| Language | English |
| Publisher | Springer US |
| Publisher Date | 2008-01-24 |
| Publisher Place | Boston |
| Access Restriction | One Nation One Subscription (ONOS) |
| Subject Keyword | Externalities Business Taxation Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies Taxes Finance /Banking Oligopoly and Other Imperfect Markets Welfare Public Finance & Economics Specific taxes Monopolistic competition |
| Content Type | Text |
| Resource Type | Article |
| Subject | Finance Accounting Economics and Econometrics |
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