nep-ind New Economics Papers
on Industrial Organization
Issue of 2005‒06‒05
one paper chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On Taxation Pass-Through for a Monopoly Firm. By Rabah Amir; Isabelle Maret; Michael Troge

  1. By: Rabah Amir; Isabelle Maret; Michael Troge
    Abstract: This paper investigates the pass-through of an excise tax imposed on a monopoly firm with constant marginal cost. The optimal price increases as tax increases for any demand function. Tax pass-through is globally under or in excess of 100% according as the direct demand function is log-concave or log-convex. The analysis relies on supermodular optimization and delivers conclusions based on minimal su¢cient assumptions in a simple, broadly accessible and self-contained framework. Further results allow for mixed conditions that provide precise and local determination of pass-through. Several illustrative examples are given. Policy conclusions relating to the relative wisdom of taxing high versus low cost monopoly firms are drawn from the results.
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:ulp:sbbeta:2004-10&r=ind

This nep-ind issue is ©2005 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.