Pigouvian Taxation with Administrative Costs
A. Mitchell Polinsky
Stanford Law School; National Bureau of Economic Research (NBER)
Harvard Law School; National Bureau of Economic Research (NBER)
NBER Working Paper No. w0742
This paper examines how the optimal Pigouvian tax should be adjusted to reflect administrative costs. Several cases are examined, depending on whether the administrative costs are fixed per firm taxed or are a function of the amount of tax collected, and on whether such costs are borne by the government or by the taxed firm. In some cases, the presence of administrative costs increases the optimal tax above the external cost, while in other cases it leads to a decrease in the tax.
Number of Pages in PDF File: 19working papers series
Date posted: August 18, 2004
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