A Contribution to the Theory of Taxation¶
Ramsey, F. P. (1927). A Contribution to the Theory of Taxation. Economic Journal, 37(145), 47-61.
Cited by¶
4 citations across 4 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Deadweight Loss
- Using the elasticity form, DWL ≈ ½ × τ² × (ε_s × ε_d / (ε_s + ε_d)) × (Q/P), making explicit that the loss scales with the square of the distortion (small distortions have negligible losses, large distortions have disproportionately large ones) and with the product over the sum of supply and demand elasticities (distortions on markets with low elasticities produce less deadweight loss — the Ramsey principle for optimal taxation).
This sourceDerives the optimal-commodity-tax rule that minimizes deadweight loss for a given revenue target — under zero cross-elasticities, the inverse-elasticity rule (tax inelastic goods more heavily).
- Using the elasticity form, DWL ≈ ½ × τ² × (ε_s × ε_d / (ε_s + ε_d)) × (Q/P), making explicit that the loss scales with the square of the distortion (small distortions have negligible losses, large distortions have disproportionately large ones) and with the product over the sum of supply and demand elasticities (distortions on markets with low elasticities produce less deadweight loss — the Ramsey principle for optimal taxation).
- Marginal Utility
- Public finance and optimal taxation: Optimal-taxation theory (Ramsey, 1927; Mirrlees, 1971)
This sourceInverse-elasticity rule for optimal commodity taxation minimizing deadweight loss.
- Public finance and optimal taxation: Optimal-taxation theory (Ramsey, 1927; Mirrlees, 1971)
- Price Elasticity
- Price elasticity appears in pricing and revenue management (airlines, hotels, subscription services, monopolistic pricing), in taxation and incidence analysis (statutory incidence differs from economic incidence; more-inelastic side bears more of the tax burden — formalized in Ramsey's (1927)
This sourceInverse-elasticity rule for optimal commodity taxation minimizing deadweight loss.
- Price elasticity appears in pricing and revenue management (airlines, hotels, subscription services, monopolistic pricing), in taxation and incidence analysis (statutory incidence differs from economic incidence; more-inelastic side bears more of the tax burden — formalized in Ramsey's (1927)
Mechanisms¶
- Tiered Commission or Fee Schedule
- The elasticity logic has a long pedigree: charge the least-sensitive side the most, a version of Ramsey's inverse-elasticity rule for pricing under a revenue constraint.
This sourceDerives Ramsey's revenue-constrained inverse-elasticity rule: relatively less elastic demands bear relatively higher optimal charges.
- The elasticity logic has a long pedigree: charge the least-sensitive side the most, a version of Ramsey's inverse-elasticity rule for pricing under a revenue constraint.
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