The Political Economy of Sin Taxes
Haavio, Markus; Kotakorpi, Kaisa (2007)
Haavio, Markus
Kotakorpi, Kaisa
2007
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Julkaisun pysyvä osoite on
https://urn.fi/urn:isbn:978-951-44-7129-2
https://urn.fi/urn:isbn:978-951-44-7129-2
Tiivistelmä
We analyse the determination of taxes on harmful goods when consumers have self-control problems. We show that under mild conditions, the socially optimal tax rate exceeds the average distortion caused by self-control problems. Further, we show that in most cases the tax rate chosen in political equilibrium is below the socially optimal level.