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http://ssrn.com/abstract=1324426
 
 

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Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition


E. Glen Weyl


Microsoft Research New England; University of Chicago

Michal Fabinger


Pennsylvania State University

February 24, 2013

Journal of Political Economy, Vol. 121, No. 3, Forthcoming

Abstract:     
We extend five principles of tax incidence under perfect competition to a general model of imperfect competition. The principles cover 1) the independence of physical and economic incidence, the 2) qualitative and 3) quantitative manner in which taxes are split between consumers and producers, 4) the determinants of tax pass-through and 5) the integration of local incidence to determine the overall division of surplus. We show how these principles can be used to simplify and generalize the analysis of a range of economic questions such as the optimal procurement of new markets and the welfare effects of third-degree price discrimination.

Number of Pages in PDF File: 62

Keywords: incidence, pass-through, conduct parameters, oligopoly

JEL Classification: D40, F10, H22

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Date posted: January 8, 2009 ; Last revised: March 6, 2013

Suggested Citation

Weyl, E. Glen and Fabinger, Michal, Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition (February 24, 2013). Journal of Political Economy, Vol. 121, No. 3, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1324426 or http://dx.doi.org/10.2139/ssrn.1324426

Contact Information

Eric Glen Weyl (Contact Author)
Microsoft Research New England ( email )
One Memorial Drive, 14th Floor
Cambridge, MA 02142
United States
(857) 998-4513 (Phone)
HOME PAGE: http://www.glenweyl.com
University of Chicago ( email )
1126 East 59th Street
Chicago, IL 60637
United States
(773) 702-4862 (Phone)
(773) 702-8490 (Fax)
HOME PAGE: http://www.glenweyl.com
Michal Fabinger
Pennsylvania State University ( email )
524 Kern Graduate Building
University Park, PA 16802-3306
United States
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