Peer-Reviewed Journal Details
Mandatory Fields
Dewit, G;Leahy, D
2015
October
Journal of Public Economic Theory
Tax Uniformity: A Commitment Device for Restraining Opportunistic Behavior
Published
1 ()
Optional Fields
MARKET-STRUCTURE ABATEMENT SUBSIDIES EMISSION TAXES POLICY OLIGOPOLY TAXATION
17
641
672
We show that uniform and differentiated tax systems diverge in their propensity to generate distortionary opportunistic behavior. First, when firms choose investment before the government can commit to its taxes, the tax scheme creates strategic incentives for firms to distort their investment. Second, a system of differentiated taxes has a greater propensity to foster strategic distortions in investment than a uniform tax regime. While the paper makes these points in a set-up in which polluting firms face an emission tax and invest in abatement, the main message is shown to hold for a wide class of tax policy games.
HOBOKEN
1097-3923
Grant Details