An alternative way to model merit good arguments
AbstractBesley (1988) uses a scaling approach to model merit good arguments in commodity tax policy. In this paper, I question this approach on the grounds that it produces 'wrong' recommendations--taxation (subsidisation) of merit (demerit) goods--whenever the demand for the (de)merit good is inelastic. I propose an alternative approach that does not suffer from this deficiency, and derive the ensuing first and second best tax rules, as well as the marginal cost expressions to perform tax reform analysis.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 595.03.
Date of creation: 21 Oct 2003
Date of revision:
merits goods; commodity taxation; tax reform analysis;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-10-28 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pazner, Elisha A, 1972. "Merit Wants and the Theory of Taxation," Public Finance = Finances publiques, , vol. 27(4), pages 460-72.
- Feehan, James P., 1990. "A simple model for merit good arguments : A comment," Journal of Public Economics, Elsevier, vol. 43(1), pages 127-129, October.
- Madden, David, 1995. "Labour Supply, Commodity Demand and Marginal Tax Reform," Economic Journal, Royal Economic Society, vol. 105(429), pages 485-97, March.
- Kaplanoglou, Georgia & Newbery, David Michael, 2003.
"Indirect Taxation in Greece: Evaluation and Possible Reform,"
International Tax and Public Finance,
Springer, vol. 10(5), pages 511-33, September.
- Georgia Kaplanoglou & David Michael Newbery, 2002. "Indirect Taxation in Greece: Evaluation and Possible Reform," CESifo Working Paper Series 661, CESifo Group Munich.
- Besley, Timothy, 1988. "A simple model for merit good arguments," Journal of Public Economics, Elsevier, vol. 35(3), pages 371-383, April.
- repec:ebl:ecbull:v:8:y:2003:i:8:p:1-5 is not listed on IDEAS
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