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Joint Products and a Positive Response to a Profit Tax

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  • David Kreutzer
  • Dwight R. Lee

Abstract

It is shown that rather than having a neutral (in the short run) or negative (in the long run) effect on output, a profit tax can, with joint products, increase a profit-maximizing firm's output. As counterintuitive as this result appears initially, it is a straightforward implication of joint products.

Suggested Citation

  • David Kreutzer & Dwight R. Lee, 1987. "Joint Products and a Positive Response to a Profit Tax," Public Finance Review, , vol. 15(1), pages 98-104, January.
  • Handle: RePEc:sae:pubfin:v:15:y:1987:i:1:p:98-104
    DOI: 10.1177/109114218701500106
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