IDEAS home Printed from https://ideas.repec.org/p/kgu/wpaper/207.html
   My bibliography  Save this paper

Revenue-Neutral Tax Reform in Vertically Related Markets

Author

Listed:
  • Kenji Fujiwara

    (School of Economics, Kwansei Gakuin University)

Abstract

This paper examines the effects of a tax reform when final goods are produced in an oligopoly and intermediate goods are produced in monopolistic competition. In particular, we address the effect of a shift from upstream to downstream taxation that leaves government revenue unchanged. This tax reform raises the consumer and producer prices of final goods, lowers the demand price of intermediate goods, and has no effect on the producer price of intermediate goods. Finally, we find that welfare improves with this tax reform.

Suggested Citation

  • Kenji Fujiwara, 2020. "Revenue-Neutral Tax Reform in Vertically Related Markets," Discussion Paper Series 207, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:207
    as

    Download full text from publisher

    File URL: http://192.218.163.163/RePEc/pdf/kgdp207.pdf
    File Function: First version, 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Kotaro Suzumura & Kazuharu Kiyono, 1987. "Entry Barriers and Economic Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 157-167.
    3. Martin Peitz & Markus Reisinger, 2014. "Indirect Taxation in Vertical Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 709-755, December.
    4. Michael Keen & Jenny E. Ligthart, 2005. "Coordinating Tariff Reduction and Domestic Tax Reform under Imperfect Competition," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 385-390, May.
    5. Hajime Sugeta & Shigeru Matsumoto, 2007. "Upstream and downstream pollution taxations in vertically related markets with imperfect competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(3), pages 407-432, November.
    6. Salanié, Bernard, 2011. "The Economics of Taxation," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262016346, April.
    7. Anthony B. Atkinson & Joseph E. Stiglitz, 2015. "Lectures on Public Economics Updated edition," Economics Books, Princeton University Press, edition 2, number 10493.
    8. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    9. Giuseppe Colangelo & Umberto Galmarini, 2001. "Ad Valorem Taxation on Intermediate Goods in Oligopoly," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(1), pages 53-73, January.
    10. Konishi, Hideki, 1990. "Final and intermediate goods taxation in an oligopolistic economy with free entry," Journal of Public Economics, Elsevier, vol. 42(3), pages 371-386, August.
    11. Shapiro, Carl, 2018. "Antitrust in a time of populism," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 714-748.
    12. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Peitz & Markus Reisinger, 2014. "Indirect Taxation in Vertical Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 709-755, December.
    2. Marco de Pinto & Laszlo Goerke & Alberto Palermo, 2024. "Business Stealing + Economic Rent = Insufficient Entry? An Integrative Framework," IAAEU Discussion Papers 202402, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Hartmut Egger & Udo Kreickemeier, 2017. "Why Foreign Ownership May be Good for You," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 13, pages 381-421, World Scientific Publishing Co. Pte. Ltd..
    4. Beverly Lapham & Hiroyuki Kasahara, 2005. "Import Protection as Export Destruction," 2005 Meeting Papers 528, Society for Economic Dynamics.
    5. Hartmut Egger & Udo Kreickemeier & Jens Wrona, 2017. "Offshoring Domestic Jobs," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 2, pages 27-70, World Scientific Publishing Co. Pte. Ltd..
    6. Juan Carluccio & Thibault Fally, 2008. "Multinationals, technological incompatibilities and spillovers," Working Papers halshs-00586040, HAL.
    7. Francesco Amodio & Leonardo Baccini & Michele Di Maio, 2021. "Security, Trade, and Political Violence," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 1-37.
    8. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    9. Liao, Wei & Santacreu, Ana Maria, 2015. "The trade comovement puzzle and the margins of international trade," Journal of International Economics, Elsevier, vol. 96(2), pages 266-288.
    10. Takanori Adachi & Michal Fabinger, 2017. "Multi-Dimensional Pass-Through, Incidence, and the Welfare Burden of Taxation in Oligopoly," CIRJE F-Series CIRJE-F-1040, CIRJE, Faculty of Economics, University of Tokyo.
    11. Patricia Augier & Olivier Cadot & Marion Dovis, 2013. "Imports and TFP at the firm level: the role of absorptive capacity," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(3), pages 956-981, August.
    12. Defever, Fabrice & Imbruno, Michele & Kneller, Richard, 2020. "Trade liberalization, input intermediaries and firm productivity: Evidence from China," Journal of International Economics, Elsevier, vol. 126(C).
    13. Bilbiie, Florin & Melitz, Marc J, 2020. "Aggregate-Demand Amplification of Supply Disruptions: The Entry-Exit Multiplier," CEPR Discussion Papers 15583, C.E.P.R. Discussion Papers.
    14. repec:hal:spmain:info:hdl:2441/1f59r6ssre9eiqb2rso9ui50m2 is not listed on IDEAS
    15. Hynes, Kate & Kwan, Yum K. & Foley, Anthony, 2020. "Local linkages: The interdependence of foreign and domestic firms in Ireland," Economic Modelling, Elsevier, vol. 85(C), pages 139-153.
    16. Olivier Cadot & Céline Carrère & Vanessa Strauss-Kahn, 2013. "Trade Diversification, Income, And Growth: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 790-812, September.
    17. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    18. Francesco Amodio & Michele Di Maio, "undated". "Making Do with What You Have: Conflict, Firm Performance and Input Misallocation in Palestine," Development Working Papers 379, Centro Studi Luca d'Agliano, University of Milano.
    19. Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1727-1767.
    20. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 241-275, May.
    21. Kojun Hamada & Takao Ohkawa & Makoto Okamura, 2022. "Optimal taxation in a free‐entry Cournot oligopoly: The average cost function approach," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 1166-1192, May.

    More about this item

    Keywords

    Final Goods; Intermediate Goods; Oligopoly; Monopolistic Competition; Tax Incidence; Welfare;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Toshihiro Okada (email available below). General contact details of provider: https://edirc.repec.org/data/dekgujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.