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Unit Versus Ad Valorem Taxes: Monopoly In General Equilibrium

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  • Blackorby, Charles
  • Murty, Sushama

Abstract

We show that if a monopoly sector is imbedded in a general equilibrium framework and profits are taxed at one hundred percent, then unit (specific) taxation and ad valorem taxation are welfare-wise equivalent. This is contrary to all known claims.

Suggested Citation

  • Blackorby, Charles & Murty, Sushama, 2006. "Unit Versus Ad Valorem Taxes: Monopoly In General Equilibrium," Economic Research Papers 269731, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269731
    DOI: 10.22004/ag.econ.269731
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    1. Delipalla, Sofia & Keen, Michael, 1992. "The comparison between ad valorem and specific taxation under imperfect competition," Journal of Public Economics, Elsevier, vol. 49(3), pages 351-367, December.
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    3. Blackorby, Charles & Donaldson, David, 1999. "Market demand curves and Dupuit-Marshall consumers' surpluses: a general equilibrium analysis," Mathematical Social Sciences, Elsevier, vol. 37(2), pages 139-163, March.
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    5. Michael Keen, 1998. "The balance between specific and ad valorem taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 19(1), pages 1-37, February.
    6. Blackorby, Charles & Murty, Sushama, 2007. "Unit versus ad valorem taxes: Monopoly in general equilibrium," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 817-822, April.
    7. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
    8. Ben Lockwood, 2004. "Competition in Unit vs. Ad Valorem Taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(6), pages 763-772, November.
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    More about this item

    Keywords

    Agricultural and Food Policy; Financial Economics;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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