Taxation and market power

K.A. Konrad, F. Morath, W. Müller

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden 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 behaviour of a monopolist. Several control treatments corroborate this finding.
Original languageEnglish
Pages (from-to)173-202
JournalThe Canadian Journal of Economics
Volume47
Issue number1
DOIs
Publication statusPublished - 2014

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

Cite this

Konrad, K.A. ; Morath, F. ; Müller, W. / Taxation and market power. In: The Canadian Journal of Economics. 2014 ; Vol. 47, No. 1. pp. 173-202.
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Taxation and market power. / Konrad, K.A.; Morath, F.; Müller, W.

In: The Canadian Journal of Economics, Vol. 47, No. 1, 2014, p. 173-202.

Research output: Contribution to journalArticleScientificpeer-review

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