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Production efficiency and excess supply

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  • Reinhorn, Leslie J.

Abstract

This paper demonstrates that intermediate goods should not be taxed even in the presence of dividend payments to households. We also find that optimal government policy in a second best world may include stockpiles of output—private supply exceeds private demand, and the government purchases the surplus. This may provide a possible explanation for some agricultural policies.

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Bibliographic Info

Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 65 (2013)
Issue (Month): 2 ()
Pages: 92-100

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Handle: RePEc:eee:matsoc:v:65:y:2013:i:2:p:92-100

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Web page: http://www.elsevier.com/locate/inca/505565

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  1. Sadka, Efraim, 1977. "A Note on Producer Taxation and Public Production," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 385-87, June.
  2. Weymark, John A, 1981. "On Sums of Production Set Frontiers," Review of Economic Studies, Wiley Blackwell, vol. 48(1), pages 179-83, January.
  3. Guesnerie,Roger, 1998. "A Contribution to the Pure Theory of Taxation," Cambridge Books, Cambridge University Press, number 9780521629560, April.
  4. Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-44, September.
  5. Guesnerie, Roger, 1977. "On the direction of tax reform," Journal of Public Economics, Elsevier, vol. 7(2), pages 179-202, April.
  6. Berliant, Marcus & Page, Frank H, Jr, 2001. "Income Taxes and the Provision of Public Goods: Existence of an Optimum," Econometrica, Econometric Society, vol. 69(3), pages 771-84, May.
  7. Dixit, Avinash, 1987. "On Pareto-improving redistributions of aggregate economic gains," Journal of Economic Theory, Elsevier, vol. 41(1), pages 133-153, February.
  8. Mirrlees, James A, 1972. "On Producer Taxation," Review of Economic Studies, Wiley Blackwell, vol. 39(1), pages 105-11, January.
  9. Dasgupta, Partha & Stiglitz, Joseph E, 1972. "On Optimal Taxation and Public Production," Review of Economic Studies, Wiley Blackwell, vol. 39(1), pages 87-103, January.
  10. Hammond, Peter J & Sempere, Jaime, 1995. "Limits to the Potential Gains from Economic Integration and Other Supply Side Policies," Economic Journal, Royal Economic Society, vol. 105(432), pages 1180-1204, September.
  11. Hahn, Frank H., 1973. "On optimum taxation," Journal of Economic Theory, Elsevier, vol. 6(1), pages 96-106, February.
  12. Diewert, W E & Turunen-Red, A H & Woodland, A D, 1989. "Productivity- and Pareto-Improving Changes in Taxes and Tariffs," Review of Economic Studies, Wiley Blackwell, vol. 56(2), pages 199-215, April.
  13. Sushama Murty, 2010. "Constraints on profit income distribution and production efficiency in private ownership economies with Ramsey taxation," Discussion Papers 1010, Exeter University, Department of Economics.
  14. Reinhorn, Leslie J., 2007. "Butter mountains and wine lakes," Economics Letters, Elsevier, vol. 94(2), pages 197-201, February.
  15. Michael Keen & David Wildasin, 2004. "Pareto-Efficient International Taxation," American Economic Review, American Economic Association, vol. 94(1), pages 259-275, March.
  16. Weymark, John A., 1979. "A reconciliation of recent results in optimal taxation theory," Journal of Public Economics, Elsevier, vol. 12(2), pages 171-189, October.
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Cited by:
  1. Sushama Murty, 2013. "Production efficiency and constraints on profit taxation and profit distribution in economies with Ramsey taxation," Social Choice and Welfare, Springer, vol. 41(3), pages 579-604, September.
  2. Murty, Sushama, 2009. "Topology of utility possibility frontiers of economies with Ramsey taxation," The Warwick Economics Research Paper Series (TWERPS) 912, University of Warwick, Department of Economics.
  3. Sushama Murty, 2010. "Constraints on profit income distribution and production efficiency in private ownership economies with Ramsey taxation," Discussion Papers 1010, Exeter University, Department of Economics.

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