Tax effects in a model of spatial price discrimination: a note

This note investigates the incidence of unit and ad valorem taxes in a framework in which firms can set discriminatory prices. In contrast with previous results obtained in Hotelling's and Vickrey-Salop's models the ad valorem tax does not affect the location of the firms nor the profits o...

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Bibliographic Details
Published in:Journal of economics (Vienna, Austria) Austria), 2010-04, Vol.99 (3), p.277-282
Main Author: Casado-Izaga, F. Javier
Format: Article
Language:English
Subjects:
Ad valorem tax
Ad valorem taxes
Consumer equilibrium
Consumer prices
Consumers
Costs
Duopoly
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Game Theory
Income taxes
Location choice
Macroeconomics/Monetary Economics//Financial Economics
Marginal costs
Mathematical functions
Microeconomics
Optimal taxation
Predatory pricing
Price discrimination
Price theory
Prices
Pricing policies
Product differentiation
Production costs
Production taxes
Profits
Public Finance
Social and Behav. Sciences
Spatial models
Spatial price discrimination
Studies
Taxation
Taxes
Transportation costs
Unit tax
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Summary:This note investigates the incidence of unit and ad valorem taxes in a framework in which firms can set discriminatory prices. In contrast with previous results obtained in Hotelling's and Vickrey-Salop's models the ad valorem tax does not affect the location of the firms nor the profits of rivals when firms have different marginal production costs. From the point of view of the unit tax it is neutral as in the standard f.o.b. pricing models.
ISSN:0931-8658
1617-7134
DOI:10.1007/s00712-010-0109-4