A new version of Edgeworth's taxation paradox
Edgworth's taxation paradox states that an excise tax can decrease the market price of a good.� This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market.� The paper also presents two new applications: (i) an emissions tax that leads to an increase in industry emissions (due to entry), and (ii) an interest rate cut by the central bank that reduces lending by commercial banks (due to exit).� Basic principles of environmental regulation and monetary policy therefore fail under the conditions of the paradox.
|Date of creation:||01 Aug 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Neumark & Steven A. Sharpe, 1989.
"Market structure and the nature of price rigidity: evidence from the market for consumer deposits,"
Finance and Economics Discussion Series
52, Board of Governors of the Federal Reserve System (U.S.).
- Neumark, David & Sharpe, Steven A, 1992. "Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 657-80, May.
- S. P. Anderson & A. de Palma & B. Kreider, 2000.
"Tax Incidence in Differentiated Product Oligopoly,"
THEMA Working Papers
2000-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- S. P. Anderson & A. de Palma & B. Kreider, 1999. "Tax incidence in differentiated product oligopoly," THEMA Working Papers 99-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Anderson, S.P. & de Palma, A. & Kreider, B., 1999. "Tax incidece in Differentiated product Oligopoly," Papers 99-10, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Simon P. Anderson & Andre de Palma & Brent Kreider, 2000. "Tax Incidence in Differentiated Product Oligopoly," Virginia Economics Online Papers 341, University of Virginia, Department of Economics.
- Anderson, Simon & de Palma, Andre & Kreider, Brent, 2001. "Tax Incidence in Differentiated Product Oligopoly," Staff General Research Papers 5202, Iowa State University, Department of Economics.
- Kind, Hans Jarle & Koethenbuerger, Marko & Schjelderup, Guttorm, 2007.
"Taxation in Two-Sided Markets,"
2007/3, Department of Business and Management Science, Norwegian School of Economics.
- Hannan, Timothy H & Berger, Allen N, 1991. "The Rigidity of Prices: Evidence from the Banking Industry," American Economic Review, American Economic Association, vol. 81(4), pages 938-45, September.
- Salinger, Michael A, 1991. "Vertical Mergers in Multi-product Industries and Edgeworth's Paradox of Taxation," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 545-56, September.
- Yongmin Chen & Michael H. Riordan, 2008. "Price-increasing competition," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1042-1058.
- Stephen F. Hamilton, 2009. "Excise Taxes with Multiproduct Transactions," American Economic Review, American Economic Association, vol. 99(1), pages 458-71, March.
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:502. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise)
If references are entirely missing, you can add them using this form.