Taxation and Market Power

K.A. Konrad, F. Morath, W. Müller

Research output: Working paperDiscussion paperOther research output

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Abstract

We analyze the incidence and welfare e¤ects of unit sales taxes in experimental monopoly and Bertrand markets. We nd, in line with economic theory, that rms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages43
Volume2010-03
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-03

Fingerprint

Market power
Taxation
Buyers
Monopoly
Monopolist
Tax burden
Burden
Tax
Sales tax
Economic theory
Pricing behaviour

Keywords

  • tax incidence
  • monopoly
  • Bertrand competition
  • experiment

Cite this

Konrad, K. A., Morath, F., & Müller, W. (2010). Taxation and Market Power. (CentER Discussion Paper; Vol. 2010-03). Tilburg: Microeconomics.
Konrad, K.A. ; Morath, F. ; Müller, W. / Taxation and Market Power. Tilburg : Microeconomics, 2010. (CentER Discussion Paper).
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Konrad, KA, Morath, F & Müller, W 2010 'Taxation and Market Power' CentER Discussion Paper, vol. 2010-03, Microeconomics, Tilburg.

Taxation and Market Power. / Konrad, K.A.; Morath, F.; Müller, W.

Tilburg : Microeconomics, 2010. (CentER Discussion Paper; Vol. 2010-03).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Taxation and Market Power

AU - Konrad, K.A.

AU - Morath, F.

AU - Müller, W.

N1 - Pagination: 43

PY - 2010

Y1 - 2010

N2 - We analyze the incidence and welfare e¤ects of unit sales taxes in experimental monopoly and Bertrand markets. We nd, in line with economic theory, that rms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist.

AB - We analyze the incidence and welfare e¤ects of unit sales taxes in experimental monopoly and Bertrand markets. We nd, in line with economic theory, that rms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist.

KW - tax incidence

KW - monopoly

KW - Bertrand competition

KW - experiment

M3 - Discussion paper

VL - 2010-03

T3 - CentER Discussion Paper

BT - Taxation and Market Power

PB - Microeconomics

CY - Tilburg

ER -

Konrad KA, Morath F, Müller W. Taxation and Market Power. Tilburg: Microeconomics. 2010. (CentER Discussion Paper).