Commodity taxation as insurance against price risk

The paper shows how commodity taxes can provide insurance to consumers when the producer price is volatile. Specific and ad valorem taxes have differing roles. The optimal specific tax is positive when demand has some elasticity. The optimal ad valorem rate is zero when demand is unit-elastic, negat...

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Bibliographic Details
Main Author: Cowan, S
Format: Working paper
Published: University of Oxford 2002