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Taxation by auction: fund raising by 19th century Indian guilds

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  • Sen, Arijit
  • Swamy, Anand V.

Abstract

We describe a unique institution used by 19th century Indian guilds to raise funds: The guild members agreed that on a particular day all but one of their shops would be shut. An auction would be held to determine which one shop would remain open, and the winning bid would go to the guild funds. We compare this "taxation by auction" mechanism with more conventional tax schemes and show that under certain conditions, not only will a majority of the guild members prefer to be taxed via an auction, but that this form of taxation will be more equitable than other forms.
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Suggested Citation

  • Sen, Arijit & Swamy, Anand V., 2004. "Taxation by auction: fund raising by 19th century Indian guilds," Journal of Development Economics, Elsevier, vol. 74(2), pages 411-428, August.
    • Handle: RePEc:eee:deveco:v:74:y:2004:i:2:p:411-428
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    More about this item

    JEL classification:

    • N85 - Economic History - - Micro-Business History - - - Asia including Middle East
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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