Do consumers buy less of a taxed good?
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Date
2006-01Metadata
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- Discussion papers (SAM) [638]
Abstract
This paper shows that consumers may buy more of a taxed good if it is
sold by a two-sided platform firm. Two-sided platform industries serve distinct
customer groups that are connected through interdependent demand, and include
major businesses such as the media industry (newspapers/magazines
and advertisers), banking (cardholder and merchant), and the software industry
(users and application developers). The paper compares ad valorem and
specific taxes and shows that they may have opposite effects on quantities
sold, and that the ad valorem tax - the most commonly used tax throughout
the OECD - has effects on prices and quantities not previously recognized.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2006:1