Taxes and quality: A market-level analysis
نویسندگان
چکیده
A conventional assumption of product homogeneity when the commodity of interest is actually heterogeneous will lead to errors in an analysis of the incidence of policies, such as taxes. In this article, an equilibrium displacement model is used to derive analytical solutions for price, quantity, and quality effects of ad valorem and per unit taxes. The results show how parameters determine the effects of tax policies on quality. The potential for tax-induced distortions in quality, and the distributive consequences of those distortions, are illustrated in a case study of the market for Australian wine.
منابع مشابه
Drink No Wine Before Its Time
We consider the impact of taxes on the quantity and quality produced of goods, such as wine, for which market value accrues with age. Any pair of taxes that includes a volumetric sales tax and any one of three other types of tax – an ad valorem sales tax, an ad valorem storage tax, or a volumetric storage tax – spans the quality/revenue space and can support an optimal tax system. Provided soci...
متن کاملDo Taxes Produce Better Wine?
Theory predicts that unit taxes increase the quality in a market since unit taxes reduce the relative price of high quality goods. Ad valorem taxes, on the other hand, have no effect on relative prices and should not affect product quality. The hypothesis is tested empirically in the US wine market. I find that the market share of high quality wine is significantly increased by unit taxes and t...
متن کاملThe Impact of Corporate income Tax and Firm Size on Fixed Investment
This paper is an attempt to analyze the impact of income taxes and market capitalization on fixed investment (investment in tangible assets) by manufacturing companies listed on KSE. This paper basically examines that how corporate income taxes affect fixed investment by reducing cash flow available for a firm to invest and how the firm size in the lights of market capitalization affects fixed ...
متن کاملCar User Taxes, Quality Characteristics and Fuel Efficiency: Household Behavior and Market Adjustment
We study the impact of fuel taxes and kilometer taxes on households’ choices of vehicle quality, on their demand for kilometers driven, and on fuel consumption. Moreover, embedding this information in a model of the car market, we analyze the implications of these taxes for the opportunity costs of owning cars of different quality. Higher quality raises the fixed cost of car ownership, but it m...
متن کاملInvestigating the Impact of Taxes on the Income of Legal Entities (Companies) on the Cost of Urban And Rural Households using Input-output analysis
Current situation of Iran Economy which is under increasing sanction can be affected negatively and followed by many consequences for the society through any misleading economic decision from government side.The Iranian tax system includes various types of taxes that are directly and indirectly collected, each of them have its own effects on society and market system. Determining the way of col...
متن کامل