Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149289
Authors: 
Kind, Hans Jarle
Köthenbürger, Marko
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6202
Abstract: 
Digital media goods and digital media platforms exhibit cost structures and network effects that imply that price and quantity effects of consumption taxes are qualitatively different compared to what we typically find for physical goods. For instance, in most European countries and US states, printed newspapers and books face favourable value-added taxes (VAT) or sales taxes. This has probably increased their circulation. However, reducing the VAT rate on digital newspapers has the opposite effects; it increases prices and leads to lower sales. This is not true for ebooks, but a low-tax policy is still ineffective if the aim is to reduce prices. The primary effect of exempting such product from value-added taxes is to increase profits for publishers.
Subjects: 
e-books
two-sided markets
media market
pricing strategy
preferential taxation
advertising
public policy
JEL: 
D43
H21
H22
L13
Document Type: 
Working Paper

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