Taxation and Market Power (Fiscalité et Pouvoir de Marché)

30 Pages Posted: 28 Jan 2014

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Florian Morath

Goethe University Frankfurt; Max Planck Institute for Tax Law and Public Finance

Wieland Müller

University of Vienna, Department of Economics & VCEE; Tilburg University, Department of Economics & CentER

Date Written: February/février 2014

Abstract

English Title: We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers, as the presence of human buyers constrains the pricing behaviour of a monopolist. Several control treatments corroborate this finding.

French Title: On analyse l'incidence et les effets de bien‐être d'une augmentation d'une taxe de vente unitaire dans des mondes de monopole expérimental et de marchés à la Bertrand. On découvre, en cohérence avec la théorie économique, que les firmes qui n'ont pas de pouvoir de marché sont capables de déporter une grande portion du fardeau de la taxe vers les consommateurs, qu'il s'agisse d'acheteurs automatisés ou d'humains. Dans les marchés monopolistes, un monopoleur porte une grande part du fardeau de l'accroissement de taxe. Quand il s'agit d'acheteurs humains, cependant, cette part est plus petite que quand il s'agit d'acheteurs automatisés, car la présence d'acheteurs humains contraint le comportement de tarification du monopoleur. Plusieurs d'expériences corroborent ce résultat.

Suggested Citation

Konrad, Kai A. and Morath, Florian and Müller, Wieland, Taxation and Market Power (Fiscalité et Pouvoir de Marché) (February/février 2014). Canadian Journal of Economics/Revue canadienne d'économique, Vol. 47, Issue 1, pp. 173-202, 2014. Available at SSRN: https://ssrn.com/abstract=2386321 or http://dx.doi.org/10.1111/caje.12067

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

Florian Morath

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

Wieland Müller

University of Vienna, Department of Economics & VCEE ( email )

Oskar-Morgenstern-Platz 1
Vienna, A-1090
Austria

HOME PAGE: http://https://homepage.univie.ac.at/wieland.mueller/

Tilburg University, Department of Economics & CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/w.mueller-3.htm

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
162
PlumX Metrics