Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/45467
Authors: 
Goerke, Laszlo
Year of Publication: 
2011
Series/Report no.: 
University of Tübingen working papers in economics and finance 8
Abstract: 
If tax obligations are met, the balanced-budget substitution of an ad valorem tax on output for a specific tax not only raises a monopolist's production, but also represents a Pareto improvement. However, if tax avoidance or evasion is feasible and the marginal costs of such actions decline with the legal tax burden, a monopolist will respond to a balanced-budget substitution of an ad valorem tax for a specific tax by reducing output, while profits remain constant. Therefore, in the presence of tax avoidance or evasion activities a move towards specific taxation can represent a Pareto improvement.
Subjects: 
Ad valorem tax
Monopoly
Output
Tax avoidance
Tax evasion
Specific tax
JEL: 
H21
H25
H26
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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