Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46341 
Authors: 
Year of Publication: 
2011
Series/Report no.: 
CESifo Working Paper No. 3339
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
In a partial equilibrium setting without price uncertainty, the balanced-budget substitution of an ad valorem tax on output for a specific (unit) tax can enhance welfare in imperfectly competitive markets and is without impact in a competitive world. This paper demonstrates that a substitution of this kind can also increase expected output and welfare in a competitive market characterised by uncertainty about the commodity price, if firms can respond to the revelation of demand conditions by altering output.
Subjects: 
ad valorem tax
commodity taxation
perfect competition
uncertainty
unit tax
JEL: 
H21
H25
Document Type: 
Working Paper
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