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Examples of unit tax superiority for a price-discriminating monopolist

Author

Listed:
  • Francisco Galera
  • José Luis Álvarez
  • Isabel Rodríguez-Tejedo

Abstract

This paper compares the welfare effects of per-unit and ad valorem taxes in four pervasive price discrimination schemes: quantity discounts, two-part tariffs, bundling, and package size price discrimination. The paper shows by example that per-unit taxes may welfare dominate ad valorem tariffs in a market with a monopoly that maximizes profits by engaging in second-degree price discrimination. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Francisco Galera & José Luis Álvarez & Isabel Rodríguez-Tejedo, 2016. "Examples of unit tax superiority for a price-discriminating monopolist," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(1), pages 158-167, February.
  • Handle: RePEc:kap:itaxpf:v:23:y:2016:i:1:p:158-167
    DOI: 10.1007/s10797-015-9353-4
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    More about this item

    Keywords

    Monopoly; Second-degree price discrimination; Unit taxes; Ad valorem taxes; D42; H21; L12;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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