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Multi‐part tariffs and differentiated commodity taxation

Multi‐part tariffs and differentiated commodity taxation We study commodity taxation in markets where firms, such as Internet Service Providers, energy suppliers, and payment card platforms, adopt multi‐part tariffs. We show that ad valorem taxes can correct underprovision and hence increase welfare, provided the government applies differentiated tax rates to the usage and access parts of the tariff. We obtain this result in different settings, including vertically interlinked markets, markets where firms adopt menus of tariffs to screen consumers, and where they compete with multi‐part tariffs. Our results suggest that exempting these markets from taxation may be inefficient. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Rand Journal of Economics Wiley

Multi‐part tariffs and differentiated commodity taxation

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References (45)

Publisher
Wiley
Copyright
© 2020 The RAND Corporation
ISSN
0741-6261
eISSN
1756-2171
DOI
10.1111/1756-2171.12340
Publisher site
See Article on Publisher Site

Abstract

We study commodity taxation in markets where firms, such as Internet Service Providers, energy suppliers, and payment card platforms, adopt multi‐part tariffs. We show that ad valorem taxes can correct underprovision and hence increase welfare, provided the government applies differentiated tax rates to the usage and access parts of the tariff. We obtain this result in different settings, including vertically interlinked markets, markets where firms adopt menus of tariffs to screen consumers, and where they compete with multi‐part tariffs. Our results suggest that exempting these markets from taxation may be inefficient.

Journal

The Rand Journal of EconomicsWiley

Published: Sep 1, 2020

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