Tax Liability-Side Equivalence in Experimental Posted-Offer Markets
In theory, the incidence of a tax should be independent of the side of the market on which it is levied. This principle of liability-side equivalence underlies virtually all theories of tax incidence. Policy discussions, however, tend to place great emphasis on the legal division of tax payments. We use computerized experimental posted-offer markets to test liability-side equivalence. We find that market outcomes are essentially the same when the tax is levied on sellers as when it is levied on buyers. Thus, we cannot reject liability-side equivalence.
Year of publication: |
2002
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Authors: | Borck, Rainald ; Engelmann, Dirk ; Müller, Wieland ; Normann, Hans-Theo |
Published in: |
Southern Economic Journal. - Southern Economic Association - SEA. - Vol. 68.2002, 3, p. 672-682
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Publisher: |
Southern Economic Association - SEA |
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