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Optimal commodity grouping in a partial equilibrium framework

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  • Pascal Belan

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, LEN - Laboratoire d'économie de Nantes - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

  • Stéphane Gauthier

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, CREST-INSEE - Centre de Recherche en Economie et en Statistique - Institut national de la statistique et des études économiques (INSEE))

Abstract

This note characterizes, in a partial equilibrium economy with a single agent, which commodities should be taxed whenever there is only one available tax rate. We show that commodities with low price elasticities should be imposed; luxuries are eventually exempted.

Suggested Citation

  • Pascal Belan & Stéphane Gauthier, 2004. "Optimal commodity grouping in a partial equilibrium framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00106895, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00106895
    DOI: 10.1016/j.econlet.2003.09.026
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00106895
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    References listed on IDEAS

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    1. Gordon, James P. F., 1989. "Tax reform via commodity grouping," Journal of Public Economics, Elsevier, vol. 39(1), pages 67-81, June.
    2. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-283, June.
    3. W. J. Corlett & D. C. Hague, 1953. "Complementarity and the Excess Burden of Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 21-30.
    4. Yitzhaki, Shlomo, 1979. "A Note on Optimal Taxation and Administrative Costs," American Economic Review, American Economic Association, vol. 69(3), pages 475-480, June.
    5. Feldstein, Martin S, 1972. "Distributional Equity and the Optimal Structure of Public Prices," American Economic Review, American Economic Association, vol. 62(1), pages 32-36, March.
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    1. Belan, Pascal & Gauthier, Stéphane & Laroque, Guy, 2008. "Optimal grouping of commodities for indirect taxation," Journal of Public Economics, Elsevier, vol. 92(7), pages 1738-1750, July.
    2. Christian Gillitzer & Henrik Jacobsen Kleven & Joel Slemrod, 2017. "A Characteristics Approach to Optimal Taxation: Line Drawing and Tax‐Driven Product Innovation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(2), pages 240-267, April.

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