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Article: Endogenous markups and the effects of income taxation: Theory and evidence from OECD countries

TitleEndogenous markups and the effects of income taxation: Theory and evidence from OECD countries
Authors
KeywordsCross-Country Evidence
E62
Endogenous Markup
Income Taxation
Monopolistic Competition
Issue Date2000
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jpube
Citation
Journal Of Public Economics, 2000, v. 77 n. 3, p. 383-406 How to Cite?
AbstractExisting studies on the effects of fiscal policy under imperfect competition typically treat each firm's price-cost markup as fixed. This paper examines the implications of endogenising the markup in a simple model of income taxation under monopolistic competition. It is demonstrated that an increase in income tax reduces the number of firms, lessens competition among surviving firms and raises the optimal markups in the new steady state. Through this channel, the effects of income taxation on the key macroeconomic variables as well as on consumer welfare are unambiguously enlarged. The simple model prediction is largely supported by cross-section regressions with data from OECD countries. © Elsevier Science S.A.
Persistent Identifierhttp://hdl.handle.net/10722/177684
ISSN
2015 Impact Factor: 1.44
2015 SCImago Journal Rankings: 2.267
References

 

DC FieldValueLanguage
dc.contributor.authorWu, Yen_US
dc.contributor.authorZhang, Jen_US
dc.date.accessioned2012-12-19T09:39:31Z-
dc.date.available2012-12-19T09:39:31Z-
dc.date.issued2000en_US
dc.identifier.citationJournal Of Public Economics, 2000, v. 77 n. 3, p. 383-406en_US
dc.identifier.issn0047-2727en_US
dc.identifier.urihttp://hdl.handle.net/10722/177684-
dc.description.abstractExisting studies on the effects of fiscal policy under imperfect competition typically treat each firm's price-cost markup as fixed. This paper examines the implications of endogenising the markup in a simple model of income taxation under monopolistic competition. It is demonstrated that an increase in income tax reduces the number of firms, lessens competition among surviving firms and raises the optimal markups in the new steady state. Through this channel, the effects of income taxation on the key macroeconomic variables as well as on consumer welfare are unambiguously enlarged. The simple model prediction is largely supported by cross-section regressions with data from OECD countries. © Elsevier Science S.A.en_US
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jpubeen_US
dc.relation.ispartofJournal of Public Economicsen_US
dc.subjectCross-Country Evidenceen_US
dc.subjectE62en_US
dc.subjectEndogenous Markupen_US
dc.subjectIncome Taxationen_US
dc.subjectMonopolistic Competitionen_US
dc.titleEndogenous markups and the effects of income taxation: Theory and evidence from OECD countriesen_US
dc.typeArticleen_US
dc.identifier.emailZhang, J: jjzhang@econ.hku.hken_US
dc.identifier.authorityZhang, J=rp01124en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.scopuseid_2-s2.0-0034259569en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0034259569&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume77en_US
dc.identifier.issue3en_US
dc.identifier.spage383en_US
dc.identifier.epage406en_US
dc.publisher.placeNetherlandsen_US
dc.identifier.scopusauthoridWu, Y=7406895405en_US
dc.identifier.scopusauthoridZhang, J=55367373100en_US

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