Microeconomic Consequences of Exemptions from Value Added Taxation – The Case of Deutsche Post
AbstractThe exemption for Value Added Taxation (VAT) can be used to pursue distributive objectives. Goods like food, housing, medicine, or infrastructure services (water, telecommunication, postal) are very often partially or totally exempted from VAT. The exemption of infrastructure services had been frequently combined with market entry restrictions. Both instruments should assure the fulfilling of the universal service obligation (USO). VAT-exemption leads to two problems, at least: (i) the expectable financial gain, which can be achieved by the exempted firm, is unpredictable, and (ii) the welfare consequences depend on the prevailing type of market structure (competition, monopoly with or without price discrimination, or dominant firm). The VAT-exemption for German postal services can be seen as an outstanding case study to show the typical consequences. Because of empirical references for intensive use of price discrimination by Deutsche Post AG and strong arguments of Deutsche Post AG as a dominant firm welfare could be increased by abolishing VAT-exemption without abandoning USO.
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Bibliographic InfoPaper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 199.
Length: 37 pages
Date of creation: Feb 2011
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Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (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.:
- Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2000. "Universal service obligations and competition," Information Economics and Policy, Elsevier, Elsevier, vol. 12(3), pages 249-259, September.
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