Unit Versus Ad Valorem Taxes: Monopoly In General Equilibrium
Charles Blackorby, Sushama Murty, Blackorby, Charles, Murty, Sushama
Abstract
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Charles Blackorby, Sushama Murty, Blackorby, Charles, Murty, Sushama
Abstract
Open-access reader
We show that if a monopoly sector is imbedded in a general equilibrium framework and profits are taxed at one hundred percent, then unit (specific) taxation and ad valorem taxation are welfare-wise equivalent. This is contrary to all known claims.
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We show that if a monopoly sector is imbedded in a general equilibrium framework and profits are taxed at one hundred percent, then unit (specific) taxation and ad valorem taxation are welfare-wise equivalent. This is contrary to all known claims.
Key concepts: Monopoly, Ad valorem tax, Economics, Welfare, Unit (ring theory), Microeconomics, General equilibrium theory, Public economics