This paper examines the effectiveness of Pigovian taxation in checking the behaviour of a durable goods monopolist who generates some externality in the production process. The durable good lasts two periods. It is found that while the effect of an increase in the tax is to lower the first...

This paper studies the design of sin taxes when firms exercise market power. We outline an optimal tax framework that highlights how market power impacts the efficiency and redistributive properties of sin taxation, and quantify these effects in an application to sugar-sweetened beverage...