Optimal Commodity Grouping in a Partial Equilibrium Framework
AbstractThe literature on indirect taxation is usually concerned with the casewhere the number of possible di¤erent tax rates equals the number of commodities.The purpose of this paper is to characterize, in a partial equilibrium framework,which commodities should be taxed at the same rate whenever there is only onepossible tax rate. It is shown that if all the consumers are endowed with thesame weight by the social planner, i.e., in the representative agent con…guration,then necessities should be taxed while luxuries should be exempted from taxation.In the many-person con…guration, where di¤erent individuals have di¤erent socialweights, only one commodity should be taxed; it is the one that is mainly consumedby households with low social weights.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2003-28.
Date of creation: 2003
Date of revision:
Other versions of this item:
- Belan, Pascal & Gauthier, Stephane, 2004. "Optimal commodity grouping in a partial equilibrium framework," Economics Letters, Elsevier, vol. 83(1), pages 49-54, April.
- Pascal Belan & Stéphane Gauthier, 2004. "Optimal commodity grouping in a partial equilibrium framework," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00106895, HAL.
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- Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June.
- Yitzhaki, Shlomo, 1979. "A Note on Optimal Taxation and Administrative Costs," American Economic Review, American Economic Association, vol. 69(3), pages 475-80, June.
- Pascal Belan & Stéphane Gauthier & Guy Laroque, 2008.
"Optimal grouping of commodities for indirect taxation,"
- Belan, Pascal & Gauthier, Stéphane & Laroque, Guy, 2008. "Optimal grouping of commodities for indirect taxation," Journal of Public Economics, Elsevier, vol. 92(7), pages 1738-1750, July.
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