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A Generalization of the Atkinson-Stiglitz (1976) Theorem on the Undesirability of Nonuniform Excise Taxation

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  • Martin Hellwig

    () (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

The Atkinson-Stiglitz (1976) theorem on the undesirability of nonuniform excise taxation when all agents have homogeneous, separable preferences is extended to allow for nonseparability with respect to endogenous variables that will be subject to distortions. The result is useful for analysing models with production and education. For such models, the conclusion of Bovenberg and Jacobs (2005), that it is desirable to distort production rather than education choices, is shown to be reversed if the hidden characteristic affects the cost of education rather than productivity.

Suggested Citation

  • Martin Hellwig, 2008. "A Generalization of the Atkinson-Stiglitz (1976) Theorem on the Undesirability of Nonuniform Excise Taxation," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_47, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2008_47
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    References listed on IDEAS

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    1. Kaplow, Louis, 2006. "On the undesirability of commodity taxation even when income taxation is not optimal," Journal of Public Economics, Elsevier, pages 1235-1250.
    2. Bruno Crépon & Marc Ferracci & Grégory Jolivet & Gerard J. van den Berg, 2009. "Active Labor Market Policy Effects in a Dynamic Setting," Journal of the European Economic Association, MIT Press, pages 595-605.
    3. J. A. Mirrlees, 1976. "Optimal Tax Theory: A Synthesis," Working papers 176, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Laroque, Guy R., 2005. "Indirect taxation is superfluous under separability and taste homogeneity: a simple proof," Economics Letters, Elsevier, vol. 87(1), pages 141-144, April.
    5. A. Lans Bovenberg & Bas Jacobs, 2005. "Redistribution and Education Subsidies are Siamese Twins," Tinbergen Institute Discussion Papers 05-036/3, Tinbergen Institute.
    6. Lans Bovenberg, A. & Jacobs, Bas, 2005. "Redistribution and education subsidies are Siamese twins," Journal of Public Economics, Elsevier, pages 2005-2035.
    7. Lans Bovenberg, A. & Jacobs, Bas, 2005. "Redistribution and education subsidies are Siamese twins," Journal of Public Economics, Elsevier, pages 2005-2035.
    8. Gauthier, Stéphane & Laroque, Guy, 2009. "Separability and public finance," Journal of Public Economics, Elsevier, pages 1168-1174.
    9. Martin F. Hellwig, 2010. "Incentive Problems With Unidimensional Hidden Characteristics: A Unified Approach," Econometrica, Econometric Society, vol. 78(4), pages 1201-1237, July.
    10. Martin Hellwig, 2008. "A Maximum Principle for Control Problems with Monotonicity Constraints," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_04, Max Planck Institute for Research on Collective Goods.
    11. Peter J. Hammond, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 263-282.
    12. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, pages 55-75.
    13. Hellwig, Martin F., 2009. "A note on Deaton's theorem on the undesirability of nonuniform excise taxation," Economics Letters, Elsevier, vol. 105(2), pages 186-188, November.
    14. Deaton, Angus, 1979. "Optimally uniform commodity taxes," Economics Letters, Elsevier, vol. 2(4), pages 357-361.
    15. Mirrlees, J. A., 1976. "Optimal tax theory : A synthesis," Journal of Public Economics, Elsevier, pages 327-358.
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    Cited by:

    1. Boadway, Robin & Song, Zhen, 2016. "Indirect taxes for redistribution: Should necessity goods be favored?," Research in Economics, Elsevier, pages 64-88.
    2. Boadway, Robin & Song, Zhen, 2016. "Indirect taxes for redistribution: Should necessity goods be favored?," Research in Economics, Elsevier, pages 64-88.
    3. Gauthier, Stéphane & Laroque, Guy, 2009. "Separability and public finance," Journal of Public Economics, Elsevier, pages 1168-1174.
    4. Bruno Crépon & Marc Ferracci & Grégory Jolivet & Gerard J. van den Berg, 2009. "Active Labor Market Policy Effects in a Dynamic Setting," Journal of the European Economic Association, MIT Press, pages 595-605.
    5. Gauthier, Stéphane & Laroque, Guy, 2009. "Separability and public finance," Journal of Public Economics, Elsevier, pages 1168-1174.

    More about this item

    Keywords

    Optimal Taxation; Atkinson-Stiglitz Theorem;

    JEL classification:

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

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