Citation

Discussion Paper Details

Please find the details for DP10670 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Income effects and the welfare consequences of tax in differentiated product oligopoly

Author(s): Rachel Griffith, Lars Nesheim and Martin O'Connell

Publication Date: June 2015

Keyword(s): compensation variation, demand estimation, income effects, oligopoly and pass-through

Programme Area(s): Industrial Organization

Abstract: Random utility models are widely used to study consumer choice. The vast majority of applications make strong assumptions about the marginal utility of income, which restricts income effects, demand curvature and pass-through. We show that flexibly modeling income effects can be important, particularly if one is interested in the distributional effects of a policy change, even in a market in which, a priori, the expectation is that income effects will play a limited role. We allow for much more flexible forms of income effects than is common and we illustrate the implications by simulating the introduction of an excise tax.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10670

Bibliographic Reference

Griffith, R, Nesheim, L and O'Connell, M. 2015. 'Income effects and the welfare consequences of tax in differentiated product oligopoly'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10670