Abstract
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.
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Casado-Izaga, F.J. Tax effects in a model of spatial price discrimination: a note. J Econ 99, 277–282 (2010). https://doi.org/10.1007/s00712-010-0109-4
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DOI: https://doi.org/10.1007/s00712-010-0109-4