Specific versus Ad Valorem Taxation and Externalities

Journal of Economics, 76(2):177-187, 2002, DOI: 10.1007/s007120200035

Posted: 7 Sep 2014

See all articles by Jukka Pirttila

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

Date Written: May 1, 2002

Abstract

This studyexamines the choice between specific and ad valorem taxes when the production of a good, produced under imperfect competition, creates harmful externalities. The optimal tax system is shown to rely on wholly ad valorem (specific) taxation if the valuation of the distortion arising from the harmful externalityis smaller (larger) than that of the imperfect competition

Keywords: mperfect competition, externalities, ad valorem taxes

JEL Classification: H21, H23, H32

Suggested Citation

Pirttila, Jukka, Specific versus Ad Valorem Taxation and Externalities (May 1, 2002). Journal of Economics, 76(2):177-187, 2002, DOI: 10.1007/s007120200035 . Available at SSRN: https://ssrn.com/abstract=2492519

Jukka Pirttila (Contact Author)

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

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