Relative Efficiency of Ad Valorem and Unit Taxes: The Case of Endogenous Quality  

Oleh:

Liu, Liqun

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Finance Review vol. 31 no. 3 (Mei 2003), page 291-301.
Topik: excise taxes; quality; efficiency
Fulltext: 291PFR313.pdf (62.66KB)

Isi artikel

This article studies the relative efficiency of unit and ad valorem taxes in a competitive market in which the quality of product is endogenous. The author finds that the relative efficiency of these two taxes depends on exactly how individuals value the quality of a product. Specifically, the unit tax welfare dominates the ad valorem tax in the “casket” case and the “full-price” case, whereas the ad valorem tax welfare dominates the unit tax in the “lightbulb” case.

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