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Excise Taxes with Multiproduct Transactions

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  • Stephen F. Hamilton

Abstract

I examine excise taxes levied on multiproduct retailers. Excise taxes reduce equilibrium output and decrease equilibrium product variety in the short run, but taxes can raise output per product in the long run and induce entry. Excise taxes are overshifted into prices in a wide range of cases, including under linear and concave demand conditions, and excise taxes shift less than one-for-one into prices only when demand is highly convex. Multiproduct transactions substantively alter the efficiency of ad valorem and specific forms of excise taxes and affect the comparison of relative tax performance over short-run and long-run time horizons. (JEL H25, H32, L11, L13, L81)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.99.1.458
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File URL: http://www.aeaweb.org/aer/data/mar09/20071037_app.pdf
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 99 (2009)
Issue (Month): 1 (March)
Pages: 458-71

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Handle: RePEc:aea:aecrev:v:99:y:2009:i:1:p:458-71

Note: DOI: 10.1257/aer.99.1.458
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Cited by:
  1. Robert A. Ritz, 2010. "A new version of Edgeworth's taxation paradox," Economics Series Working Papers 502, University of Oxford, Department of Economics.
  2. Kai A. Konrad & Florian Morath & Wieland Müller, 2009. "Taxation and Market Power," CESifo Working Paper Series 2880, CESifo Group Munich.
  3. Martin Peitz & Markus Reisinger, 2009. "Indirect Taxation in Vertical Oligopoly," CESifo Working Paper Series 2583, CESifo Group Munich.
  4. Laszlo Goerke & Frederik Herzberg & Thorsten Upmann, 2012. "Failure of Ad Valorem and Specific Tax Equivalence under Uncertainty," CESifo Working Paper Series 3946, CESifo Group Munich.
  5. Goerke, Laszlo, 2011. "The optimal structure of commodity taxation in a monopoly with tax avoidance or evasion," University of Tuebingen Working Papers in Economics and Finance 8, University of Tuebingen, Faculty of Economics and Social Sciences.
  6. Laszlo Goerke, 2011. "Commodity Tax Structure under Uncertainty in a Perfectly Competitive Market," CESifo Working Paper Series 3339, CESifo Group Munich.
  7. Reny, Philip J. & Wilkie, Simon J. & Williams, Michael A., 2012. "Tax incidence under imperfect competition: Comment," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 399-402.
  8. Richards, Timothy J. & Hamilton, Stephen F., 2011. "Variety and Cost Pass-Through among Supermarket Retailers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114815, European Association of Agricultural Economists.
  9. Richards, Timothy J. & Allender, William J. & Hamilton, Stephen F., 2012. "Commodity price inflation, retail pass-through and market power," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 50-57.
  10. Aiura, Hiroshi & Ogawa, Hikaru, 2013. "Unit tax versus ad valorem tax: A tax competition model with cross-border shopping," Journal of Public Economics, Elsevier, vol. 105(C), pages 30-38.
  11. Vetter, Henrik, 2012. "Indirect taxation of monopolists: A tax on price," Economics Discussion Papers 2012-60, Kiel Institute for the World Economy.

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