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Unit Versus Ad Valorem Taxes : Monopoly In General Equilibrium

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Author Info
Blackorby, Charles (Department of Economics, University of Warwick and GREQAM)
Murty, Sushama (Department of Economics, University of Warwick)

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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.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/publications/2006/twerp_761.pdf
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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 761.

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Length: 18 pages
Date of creation: 2006
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Handle: RePEc:wrk:warwec:761

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Related research
Keywords: Ad valorem taxes ; unit taxes ; monopoly;

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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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References listed on IDEAS
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.:
  1. Ben Lockwood, 2004. "Competition in Unit vs. Ad Valorem Taxes," Asia-Pacific Financial Markets, Springer, vol. 11(6), pages 763-772, November. [Downloadable!] (restricted)
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  2. Guesnerie Roger & Laffont Jean-jacques, 1978. "Taxing price makers," CEPREMAP Working Papers (Couverture Orange) 7806, CEPREMAP.
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  3. Diewert, W. E. & Avriel, M. & Zang, I., 1981. "Nine kinds of quasiconcavity and concavity," Journal of Economic Theory, Elsevier, vol. 25(3), pages 397-420, December. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
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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. [Downloadable!]
  6. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Skeath, Susan E. & Trandel, Gregory A., 1994. "A Pareto comparison of ad valorem and unit taxes in noncompetitive environments," Journal of Public Economics, Elsevier, vol. 53(1), pages 53-71, January. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Lapan, Harvey E. & Hennessy, David A., 2007. "Unit vs. Ad Valorem Taxes in Multi-Product Cournot Oligopoly," Staff General Research Papers 12780, Iowa State University, Department of Economics. [Downloadable!]
  2. Ramón Torregrosa, 2008. "Macroeconomic effects of an indirect tax substitution," Journal of Economics, Springer, vol. 94(3), pages 199-221, September. [Downloadable!] (restricted)
  3. Blackorby, Charles & Murty, Sushama, 2007. "Unit Versus Ad Valorem Taxes : The Private Ownership of Monopoly In General Equilibrium," The Warwick Economics Research Paper Series (TWERPS) 797, University of Warwick, Department of Economics. [Downloadable!]
  4. Alan Krause, 2007. "A Tax Reform Analysis of the Laffer Argument," Discussion Papers 07/10, Department of Economics, University of York. [Downloadable!]
  5. X. Wang & Jingang Zhao, 2009. "On the efficiency of indirect taxes in differentiated oligopolies with asymmetric costs," Journal of Economics, Springer, vol. 96(3), pages 223-239, April. [Downloadable!] (restricted)
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