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Taxation on duopoly e-commerce platforms and their search environments

Author

Listed:
  • Sangita Poddar

    (Jadavpur University)

  • Tanmoyee Banerjee(Chatterjee)

    (Jadavpur University)

  • Swapnendu Banerjee

    (Jadavpur University)

Abstract

The paper studies the issue of tax incidence for duopoly e-commerce platforms where buyers evaluate two platforms before making any purchase, and platforms provide a favourable environment for smooth and effortless search process. We determine optimal level of prices and search environments by constructing a simple game-theoretic model. Sensitivity analysis is conducted to derive the effects of change in tax on search environment and prices paid by consumers. Both the platforms improve their search environments in response to increase in tax rate. The comparison of market equilibrium with social optimum indicates that duopoly e-commerce platforms provide lower level of search environments compared to social optimum level for a same level of tax.

Suggested Citation

  • Sangita Poddar & Tanmoyee Banerjee(Chatterjee) & Swapnendu Banerjee, 2023. "Taxation on duopoly e-commerce platforms and their search environments," SN Business & Economics, Springer, vol. 3(8), pages 1-20, August.
    • Handle: RePEc:spr:snbeco:v:3:y:2023:i:8:d:10.1007_s43546-023-00509-1
    DOI: 10.1007/s43546-023-00509-1
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    References listed on IDEAS

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    More about this item

    Keywords

    E-commerce platform; Search environment; Social welfare; Tax incidence;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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