Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145036
Authors: 
Moriconi, Simone
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6001
Abstract: 
Taxes levied on production processes (e.g. VAT), are today a very important source of government revenues in developed economies. Theories of optimal taxation conclude that these taxes are detrimental to production efficiency, when firms operate in perfectly competitive markets. These theories draw on the neoclassical approach, which regards firms as single production units. The present paper investigates the effects of taxation on production efficiency, accounting for the organization of an industry. The model shows that a lump-sum tax does not have any effect on the organization of the industry, while a non lump-sum tax can be designed that induces an organizational change of the industry. The paper shows that the effect of this ”tax induced organizational change” on production efficiency ultimately depends on the characteristics of the market.
Subjects: 
taxation
organizational change
vertical integration
production efficiency
JEL: 
H21
L22
H32
Document Type: 
Working Paper

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