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The generalised anti-inverse elasticity rule: An existence result

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  • Minagawa, Junichi
  • Upmann, Thorsten

Abstract

We consider an optimal commodity taxation problem under a consumption target with many consumer types and prove the existence of an optimal solution for this problem. The optimal solution obeys taxation rules that are contrary to standard ones such as the inverse-elasticity rule. For a single consumer type, we show that the necessary and sufficient conditions for the optimal solution obey the uniform pricing rule.

Suggested Citation

  • Minagawa, Junichi & Upmann, Thorsten, 2021. "The generalised anti-inverse elasticity rule: An existence result," Mathematical Social Sciences, Elsevier, vol. 114(C), pages 110-115.
    • Handle: RePEc:eee:matsoc:v:114:y:2021:i:c:p:110-115
    DOI: 10.1016/j.mathsocsci.2021.08.005
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    References listed on IDEAS

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    1. Sandmo, Agnar, 1974. "A Note on the Structure of Optimal Taxation," American Economic Review, American Economic Association, vol. 64(4), pages 701-706, September.
    2. Junichi Minagawa & Thorsten Upmann, 2018. "Optimal taxation under a consumption target," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(4), pages 663-676, April.
    3. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985.
    4. Dixit, Avinash K., 1990. "Optimization in Economic Theory," OUP Catalogue, Oxford University Press, edition 2, number 9780198772101.
    5. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
    6. Sadka, Efraim, 1977. "A theorem on uniform taxation," Journal of Public Economics, Elsevier, vol. 7(3), pages 387-391, June.
    7. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-278, June.
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    Cited by:

    1. Minagawa, Junichi & Upmann, Thorsten, 2022. "The generalised anti-inverse elasticity rule: A concise result," Mathematical Social Sciences, Elsevier, vol. 118(C), pages 20-21.

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