Pass-through, welfare, and incidence under imperfect competition

• Welfare effects of taxation and other costs under imperfect competition are analyzed. Formulas for the marginal value public funds incidence provided. Our framework can be readily extended to encompass firm heterogeneity. This paper provides a comprehensive study welfare multiple policy interventions external changes with emphasis on specific ad valorem as leading case. Specifically, in relation tax pass-through, we provide “sufficient statistics” formulas two measures fairly general class demand, production cost, market competition. The (i) (i.e., change consumer producer surplus relative an increase net cost government), (ii) ratio surplus). We begin case symmetric firms facing both unit taxes derive simple empirically relevant set formulas. Then, substantial generalization these results heterogeneity by using idea revenue that is specified function parameterized vector instruments including government non-government than taxation.