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Production efficiency and excess supply

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  • Leslie J. Reinhorn

    () (Durham Business School)

Abstract

This paper demonstrates that intermediate goods should not be taxed even in the presence of dividend payments to households, thus clarifying previous results. We also find that optimal government policy in a second best world may include stockpiles of output - private supply exceeds private demand, and the government purchases the surplus. This may provide a possible explanation for some agricultural policies.

Suggested Citation

  • Leslie J. Reinhorn, 2011. "Production efficiency and excess supply," Working Papers 2011_13, Durham University Business School.
  • Handle: RePEc:dur:durham:2011_13
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    File URL: http://dro.dur.ac.uk/10339
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    References listed on IDEAS

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    1. Hammond, Peter J & Sempere, Jaime, 1995. "Limits to the Potential Gains from Economic Integration and Other Supply Side Policies," Economic Journal, Royal Economic Society, vol. 105(432), pages 1180-1204, September.
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    14. Sushama Murty, 2010. "Constraints on profit income distribution and production efficiency in private ownership economies with Ramsey taxation," Discussion Papers 1010, University of Exeter, Department of Economics.
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    Cited by:

    1. Sushama Murty, 2013. "Production efficiency and constraints on profit taxation and profit distribution in economies with Ramsey taxation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(3), pages 579-604, September.
    2. Sushama Murty, 2010. "Constraints on profit income distribution and production efficiency in private ownership economies with Ramsey taxation," Discussion Papers 1010, University of Exeter, Department of Economics.
    3. Sushama Murty, "undated". "Lessons from optimal taxation theory for the GST and beyond," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 17-07, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    4. Stéphane Gauthier & Guy Laroque, 2019. "Production efficiency and profit taxation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(2), pages 215-223, February.
    5. Blackorby, Charles & Murty, Sushama, 2009. "Constraints on Income Distribution and Production Efficiency In Economies with Ramsey Taxation," Economic Research Papers 271292, University of Warwick - Department of Economics.
    6. Murty, Sushama, 2009. "Topology of utility possibility frontiers of economies with Ramsey taxation," Economic Research Papers 271288, University of Warwick - Department of Economics.
    7. Murty, Sushama, 2009. "Topology of utility possibility frontiers of economies with Ramsey taxation," The Warwick Economics Research Paper Series (TWERPS) 912, University of Warwick, Department of Economics.

    More about this item

    Keywords

    production efficiency; excess supply; optimal taxation; non-tight equilibrium; price supports;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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