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Social Choice and Welfare

, Volume 49, Issue 1, pp 11–35 | Cite as

Restoring Ramsey tax lessons to Mirrleesian tax settings: Atkinson–Stiglitz and Ramsey reconciled

  • Helmuth CremerEmail author
  • Firouz Gahvari
Original Paper
  • 144 Downloads

Abstract

This paper restores many of the Ramsey tax/pricing lessons perceived as outdated in the optimal tax literature following the Atkinson and Stiglitz (J Public Econ 6:55–75, 1976) framework wherein differential commodity taxes are considered to be redundant. The key to our findings is the incorporation of a “break-even constraint” for public firms into the Atkinson and Stiglitz framework. Break-even constraints are fundamental to the regulatory pricing literature but have somehow been overlooked in the optimal tax literature. Incorporating them reconciles the optimal-tax and the regulatory-pricing views on Ramsey tax/pricing rules.

Keywords

Public Firm Price Rule Ramsey Price Marshallian Demand Ramsey Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2017

Authors and Affiliations

  1. 1.Toulouse School of EconomicsUniversity of Toulouse CapitoleToulouseFrance
  2. 2.Department of EconomicsUniversity of Illinois at Urbana-ChampaignUrbanaUSA

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