Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147321
Authors: 
Minagawa, Junichi
Upmann, Thorsten
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6067
Abstract: 
We consider a government facing a constraint on the total consumption of a specific good with varieties, and formulate an optimal commodity tax problem under a consumption target. We obtain a uniform pricing result (similar to the familiar uniform taxation rule): setting the same consumer price for all varieties constitutes a solution if, and only if, the compensated price elasticities of the varieties with respect to an untaxed good are all equal and non-negative. If, however, this elasticity condition does not hold, the optimal policy is at variance with the well-known inverse elasticity rule and with the Corlett–Hague rule.
Subjects: 
consumption target
Corlett-Hague Rule
inverse elasticity rule
optimal commodity taxation
uniform taxation
JEL: 
H21
H23
Document Type: 
Working Paper

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