A new version of Edgeworth's taxation paradox
Edgworth's taxation paradox states that an excise tax can decrease the market price of a good. This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market. The paper also presents two new applications: (i) an emis...
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| Format: | Working paper |
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University of Oxford
2010
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| _version_ | 1797084775154974720 |
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| author | Ritz, R |
| author_facet | Ritz, R |
| author_sort | Ritz, R |
| collection | OXFORD |
| description | Edgworth's taxation paradox states that an excise tax can decrease the market price of a good. This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market. The paper also presents two new applications: (i) an emissions tax that leads to an increase in industry emissions (due to entry), and (ii) an interest rate cut by the central bank that reduces lending by commercial banks (due to exit). Basic principles of environmental regulation and monetary policy therefore fail under the conditions of the paradox. |
| first_indexed | 2024-03-07T01:59:45Z |
| format | Working paper |
| id | oxford-uuid:9ceecd4c-ba03-4805-8d81-6b9badda9ccf |
| institution | University of Oxford |
| last_indexed | 2024-03-07T01:59:45Z |
| publishDate | 2010 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:9ceecd4c-ba03-4805-8d81-6b9badda9ccf2022-03-27T00:39:36ZA new version of Edgeworth's taxation paradoxWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:9ceecd4c-ba03-4805-8d81-6b9badda9ccfBulk import via SwordSymplectic ElementsUniversity of Oxford2010Ritz, REdgworth's taxation paradox states that an excise tax can decrease the market price of a good. This paper presents a new version of the paradox in which a tax reduces price because it attracts entry of additional firms into the market. The paper also presents two new applications: (i) an emissions tax that leads to an increase in industry emissions (due to entry), and (ii) an interest rate cut by the central bank that reduces lending by commercial banks (due to exit). Basic principles of environmental regulation and monetary policy therefore fail under the conditions of the paradox. |
| spellingShingle | Ritz, R A new version of Edgeworth's taxation paradox |
| title | A new version of Edgeworth's taxation paradox |
| title_full | A new version of Edgeworth's taxation paradox |
| title_fullStr | A new version of Edgeworth's taxation paradox |
| title_full_unstemmed | A new version of Edgeworth's taxation paradox |
| title_short | A new version of Edgeworth's taxation paradox |
| title_sort | new version of edgeworth s taxation paradox |
| work_keys_str_mv | AT ritzr anewversionofedgeworthstaxationparadox AT ritzr newversionofedgeworthstaxationparadox |