Tax Liability-Side Equivalence in Experimental Posted-Offer Markets
AbstractIn theory, the incidence of a tax should be independent of the side of the market on which it is levied. This principle of liability-side equivalence underlies virtually all theories of tax incidence. Policy discussions, however, tend to place great emphasis on the legal division of tax payments. We use computerized experimental posted-offer markets to test liability-side equivalence. We find that market outcomes are essentially the same when the tax is levied on sellers as when it is levied on buyers. Thus, we cannot reject liability-side equivalence.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 68 (2002)
Issue (Month): 3 (January)
Other versions of this item:
- Borck, Rainald & Engelmann, Dirk & Müller, Wieland & Normann, Hans-Theo, 2000. "Tax liability side equivalence in experimental posted-offer markets," SFB 373 Discussion Papers 2000,8, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
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