Optimal commodity grouping in a partial equilibrium framework

Pascal Belan (1, 2) , Stéphane Gauthier (3, 4)

1 EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative
2 LEN - Laboratoire d'économie de Nantes
3 CREM - Centre de recherche en économie et management
4 CREST-INSEE - Centre de Recherche en Economie et en Statistique

This note characterizes, in a partial equilibrium economy with a single agent, which commodities should be taxed whenever there is only one available tax rate. We show that commodities with low price elasticities should be imposed; luxuries are eventually exempted.

Mots clés: Optimal indirect taxation; Commodity grouping

Domaines: Economies et finances

Pascal Belan, Stéphane Gauthier. Optimal commodity grouping in a partial equilibrium framework. Economics Letters, 2004, 83 (1), pp.49-54. ⟨10.1016/j.econlet.2003.09.026⟩. ⟨halshs-00106895⟩