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Taxation of a digital monopoly platform
[Un modèle calibré de l’effet du CICE sur l’emploi]

Author

Listed:
  • Marc Bourreau

    (Télécom ParisTech)

  • Bernard Caillaud

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

  • Romain de Nijs

    (X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

Abstract

This paper investigates the impact on fiscal revenues of taxing a two-sided monopolistic platform offering personalized services to users and targeted advertising to sellers, based on the collection of users' personal data. We show that the introduction of a small tax on data collection, which has been proposed in the French context by Collin and Colin, fails to increase fiscal revenues if the value-added tax (VAT) rate is high enough, due to a tax base interdependence effect between the two taxes. Under a supermodularity condition on the platform's profit function as a function of its prices, this result generalizes to any per-unit tax. However, in some cases, an ad valorem tax on subscriptions or on advertising may raise fiscal revenues, irrespective of the VAT rate, as well as welfare.

Suggested Citation

  • Marc Bourreau & Bernard Caillaud & Romain de Nijs, 2018. "Taxation of a digital monopoly platform [Un modèle calibré de l’effet du CICE sur l’emploi]," PSE-Ecole d'économie de Paris (Postprint) hal-01629659, HAL.
    • Handle: RePEc:hal:pseptp:hal-01629659
    DOI: 10.1111/jpet.12255
    as

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