2409-1634Research result. Economic Research2409-163410.18413/2409-1634-2014-1-1-5-1884MAIN FEATURETHE INCIDENCE OF NON-LINEAR CONSUMPTION TAXESTHE INCIDENCE OF NON-LINEAR CONSUMPTION TAXESCarbonnierClґementCarbonnierClґementclement.carbonnier@u-cergy.fr20141100

The present article generalyses existing economic litterature on consumption tax incidence to general forms of consumption taxes. Previous studies were limited to the cases of per unit and ad valorem taxes. Three main contributions are provided. From a methodological point of view, the elasticity of the tax function is introduced as a new parameter to take the shape of general consumption tax schedules into account in diferent models of imperfect competition in a tractable manner. From a theoretical point of view, existing results on the diference of incidence of ad valorem and per unit consumption taxes are generalized to non-linear consumption taxes: the larger the elasticity of the tax function the weaker the share of the consumption tax beared by consumers. From an applied public economic point of view, it is shown how the regulator may put downwards prices on very uncompetitive markets by increasing the elasticity of the consumption tax on a targeted window of producer prices.

The present article generalyses existing economic litterature on consumption tax incidence to general forms of consumption taxes. Previous studies were limited to the cases of per unit and ad valorem taxes. Three main contributions are provided. From a methodological point of view, the elasticity of the tax function is introduced as a new parameter to take the shape of general consumption tax schedules into account in diferent models of imperfect competition in a tractable manner. From a theoretical point of view, existing results on the diference of incidence of ad valorem and per unit consumption taxes are generalized to non-linear consumption taxes: the larger the elasticity of the tax function the weaker the share of the consumption tax beared by consumers. From an applied public economic point of view, it is shown how the regulator may put downwards prices on very uncompetitive markets by increasing the elasticity of the consumption tax on a targeted window of producer prices.

Consumption taxesImperfect CompetitionTax IncidenceEciencyConsumption taxesImperfect CompetitionTax IncidenceEciencyСписок литературыAnderson, S. P., de Palma, A., and Kreider, B. (2001a). The eciency of indirect taxes under imperfect competition. Journal of Public Economics, 81(2):231–251.Anderson, S. P., de Palma, A., and Kreider, B. (2001b). Tax incidence in differentiated product oligopoly. Journal of Public Economics, 81(2):173–192.Besley, T. (1989). Commodity taxation and imperfect competition : A note on the effects of entry. Journal of Public Economics, 40(3):359–367.Besley, T. J. and Rosen, H. S. (1999). Vertical externalities in tax setting: Evidence from gasoline and cigarettes. (6517).Carbonnier, C. (2007). Who pays sales taxes? evidence from french vat reforms,1987-1999.  Journal of Public Economics, 91(5-6):1219–1229.Carbonnier, C. (2009). Differing price adjustments to rises and falls in vat rates: An empirical analysis based on the 1995 and 2000 french reforms. Economie et Statistique, 413:3–20.Carbonnier, C. (2011). Shifting on prices of per unit and ad valorem consumption taxes, estimation on prices of alcoholic beverages in France. THEMA Working Papers 2011-20, THEMA (THйorie Economique, Mod  elisationbet Applications), Universit  e de Cergy-Pontoise.Cournot,  A.  (1838). Recherches sur les principes mathematiques de la theorie des richesses. Oeuvres compl etes. Tome VIII. C.N.R.S. and Librairie philosophique J. Vrin, Paris, 1980.Delipalla, S. and Keen, M. (1992). The comparison between ad valorem and speciɡc taxation under imperfect competition. Journal of Public Economics, 49(3):351–367.Delipalla, S. and O'Donnell, O. (2001).Estimating tax incidence, market power and market conduct: The european cigarette industry. International Journal of Industrial Organization, 19(6):885–908.Dixit, A. K. and Stiglitz, J. E. (1977). Monopolistic competition and optimum product diversity. American Economic Review, 67(3):297–308.Fullerton, D. and Metcalf, G. E. (2002). Tax incidence. In Auerbach, A. J. and Feldstein, M., editors, Handbook of Public Economics, volume 4 of Handbook of Public Economics, chapter 26, pages 1787–1872. Elsevier.Katz, M. L. and Rosen, H. S. (1985). Tax  analysis  in  an  oligopoly  model.  NBER Working  Papers  1088,  National  Bureau  of  Economic Research, Inc.Kokovin, S., Parenti, M., Thisse, J.-F., and Zhelobodko, E. (2011). Monopolistic competition in general equilibrium: Beyond the CES. Core discussion papers, Core U. Catholique de Louvain.Kreps, D. M. and Scheinkman, J. A. (1983).  Quantity  precommitment  and  bertrand competition yield cournot outcomes. Bell Journal of Economics, 14(2):326–337.Quesnay, F. (1759). Le tableau   economique, trans: The Economic Table. University Press of the Paciɡc, Honolulu, Hawaii, 2004 edition.Ricardo, D. (1821). The Principles of Political Economy and Taxation. Dover publication, Mineola, New-York, 2004 edition.Seade, J. K. (1980). On the effects of entry. Econometrica, 48(2):479–89.Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. University of Chicago Press, Chicago, Illinois, 1977 edition. Stern, N. (1987). The effects of taxation, price control and government contracts in oligopoly and monopolistic competition. Journal of Public Economics,  32(2):133–158.Suits, D. and Musgrave, R. (1953). Ad valorem and unit taxes compared. Quarterly Journal of Economics, 67:598–604.Tirole,  J.  (1988).  The Theory of Industrial Organization. The MIT Press, Cambridge, Massachusetts, fourth edition.Wicksell,  K.  (1896).  Finanztheoretische Untersuchungen nebst Darstellung and  Kritik  des  Steuerwesens  Schwedens. Gustav Fisher, Jena.Wu, X.-w., Zhu, Q.-t., and Sun, L. (2012). On equivalence between cournot competition and the kreps-scheinkman game. International Journal of Industrial Organization, 30(1):116–125.