Optimal Commodity Taxation and Redistribution within Households

15 Pages Posted: 4 Dec 2013

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Olivier Donni

University of Cergy-Pontoise - THEMA; IZA Institute of Labor Economics; Centre Interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)

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Date Written: January 2014

Abstract

Using a collective model of consumption, we characterize optimal commodity taxes aimed at targeting specific individuals within the household. The main message is that distortionary indirect taxation can circumvent the agency problem of the household. Essentially, taxation should discourage less the consumption of a certain group of goods - those for which the slope of the Engel curves is larger for the targeted person.

Suggested Citation

Bargain, Olivier and Donni, Olivier, Optimal Commodity Taxation and Redistribution within Households (January 2014). Economica, Vol. 81, Issue 321, pp. 48-62, 2014, Available at SSRN: https://ssrn.com/abstract=2362591 or http://dx.doi.org/10.1111/ecca.12055

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

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HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Olivier Donni

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre Interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE) ( email )

Pavillon De Sève
Ste-Foy, Quebec G1K 7P4
Canada

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