Optimal taxation and market power
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- dc.contributor.author Eeckhout, Jan
- dc.contributor.author Fu, Chunyang
- dc.contributor.author Li, Wenjian
- dc.contributor.author Weng, Xi
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:28Z
- dc.date.available 2024-11-14T10:09:28Z
- dc.date.issued 2021-04-01
- dc.date.modified 2024-11-14T10:07:55Z
- dc.description.abstract Should optimal income taxation change when firms have market power? The recent rise of market power has led to an increase in income inequality and a deterioration in efficiency and welfare. We analyze how the planner can optimally set taxes on labor income of workers and on the profits of entrepreneurs to induce a constrained efficient allocation. Our results show that optimal taxation in the presence of market power can substantially increase welfare, but it also highlights the severe constraints that the Planner faces to correct the negative externality from market power, using the income tax as a Pigouvian taxes. Pigouvian taxes compete with Mirrleesian incentive concerns, which generally leads to opposing forces. Overall, we find that due to incentive concerns, market power tends to lower marginal tax rates on workers, whereas it increases the marginal tax rate on entrepreneurs.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1777
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68531
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1777
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword optimal taxation
- dc.subject.keyword optimal profit tax
- dc.subject.keyword market power
- dc.subject.keyword market structure
- dc.subject.keyword markups
- dc.subject.keyword Microeconomics
- dc.title Optimal taxation and market power
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper