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

62 Pages Posted: 8 Jan 2009 Last revised: 6 Mar 2013

See all articles by E. Glen Weyl

E. Glen Weyl

Microsoft ; RadicalxChange Foundation

Michal Fabinger

University of Tokyo - Graduate School of Economics

Date Written: February 24, 2013

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.

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

JEL Classification: D40, F10, H22

Suggested Citation

Weyl, Eric 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: https://ssrn.com/abstract=1324426 or http://dx.doi.org/10.2139/ssrn.1324426

Eric Glen Weyl (Contact Author)

Microsoft ( email )

306 Park Ave
Apt 3
Hoboken, NJ 07030
United States
8579984513 (Phone)

HOME PAGE: http://www.glenweyl.com

RadicalxChange Foundation ( email )

HOME PAGE: http://www.radicalxchange.org

Michal Fabinger

University of Tokyo - Graduate School of Economics ( email )

Tokyo
Japan

HOME PAGE: http://sites.google.com/site/fabinger/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
2,215
Abstract Views
7,584
rank
6,487
PlumX Metrics