Optimal taxation and market power
Should optimal income taxation change when firms have market power? We analyze how the planner can optimally tax labor income of workers and profits of entrepreneurs. We derive optimal tax rates that depend on markups and identify four distinct components: the Mirrleesian incentive effect, the Pigou...
| Autores: | , , , |
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| Formato: | artículo |
| Estado: | Versión publicada |
| Fecha de publicación: | 2026 |
| País: | España |
| Recursos: | Universitat Pompeu Fabra |
| Repositorio: | Repositorio Digital de la UPF |
| OAI Identifier: | oai:dnet:rdupf_______::703ac0dea4d6c44f9ecd043cc2595080 |
| Acesso em linha: | https://hdl.handle.net/10230/73381 http://dx.doi.org/10.1257/aer.20211445 |
| Access Level: | acceso abierto |
| Palavra-chave: | Estats Units d&apos Amèrica -- Política fiscal Impostos -- Models matemàtics Distribució de la renda -- Estats Units d&apos Amèrica Concentració industrial -- Aspectes econòmics |
| Resumo: | Should optimal income taxation change when firms have market power? We analyze how the planner can optimally tax labor income of workers and profits of entrepreneurs. We derive optimal tax rates that depend on markups and identify four distinct components: the Mirrleesian incentive effect, the Pigouvian tax correction of the negative externality of market power, redistribution through altered factor prices, and reallocation of output toward the most productive firms. We quantify the optimal tax for the US economy and provide concrete proposals how to use income taxation to redistribute income while incentivizing production in the presence of market power. |
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