Taxation and Market Power
AbstractWe analyze the incidence and welfare e¤ects of unit sales taxes in experimental monopoly and Bertrand markets. We nd, in line with economic theory, that rms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2010-03.
Date of creation: 2010
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tax incidence; monopoly; Bertrand competition; experiment;
Other versions of this item:
- Konrad, Kai A. & Morath, Florian & Müller, Wieland, 2010. "Taxation and market power," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-07, Social Science Research Center Berlin (WZB).
- Kai A. Konrad & Florian Morath & Wieland Müller, 2009. "Taxation and Market Power," CESifo Working Paper Series 2880, CESifo Group Munich.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-COM-2010-03-06 (Industrial Competition)
- NEP-EXP-2010-03-06 (Experimental Economics)
- NEP-PBE-2010-03-06 (Public Economics)
- NEP-PUB-2010-03-06 (Public Finance)
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