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In-Kind Taxes, Behavior, and Comparative Advantage

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  • Casey B. Mulligan

Abstract

This paper treats taxation in kind (IKT) as an example of price regulation, emphasizing IKT-avoidance behavior, and its interactions with the other costs of price controls. This emphasis fundamentally changes efficiency conclusions, and adds new ones. IKTs do not in fact randomly sample suppliers. Large-scale IKTs, and not small-scale ones, may have especially large average efficiency costs. Ransoms or “commutation fees” are an IKT policy option, but are only efficiency enhancing in specific situations: more heterogeneity among suppliers, and avoidance technologies that result in avoidance behaviors that are poor signals of a supplier’s opportunity cost. Avoidance behaviors are one reason why the social costs of wars and other public projects involving IKTs may have been underestimated.

Suggested Citation

  • Casey B. Mulligan, 2015. "In-Kind Taxes, Behavior, and Comparative Advantage," NBER Working Papers 21586, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21586
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    References listed on IDEAS

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    Cited by:

    1. Casey B. Mulligan & Kevin K. Tsui, 2016. "The Upside-down Economics of Regulated and Otherwise Rigid Prices," NBER Working Papers 22305, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • K2 - Law and Economics - - Regulation and Business Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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