Firm types, price-setting strategies, and consumption-tax incidence
Kosonen, Tuomas; Harju, Jarkko; Nordström Skans, Oskar (2015-12-29)
Kosonen, Tuomas
Harju, Jarkko
Nordström Skans, Oskar
Valtion taloudellinen tutkimuskeskus VATT
29.12.2015
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2018042618662
https://urn.fi/URN:NBN:fi-fe2018042618662
Tiivistelmä
Studying very detailed micro data collected around two different VAT reforms in Europe, we show that tax incidence is heavily dependent on the characteristics of the price-setting firms. The reforms generated bimodal price-change distributions; nearly all independent restaurants left prices unchanged whereas a substantial fraction of restaurants belonging to chains chose a complete pass-through. These differences cannot be explained by location, initial prices or other market-segment indicators. Instead, differences appear to arise because independent restaurants aim for (very) crude price ranges rather than fine-tuned optimized prices, whereas chains use more elaborate, coordinated pricing strategies.
Tutkimusteema
Taxation, Verotus, Taxation and Social Transfers, Julkisen talouden rahoitus ja tulonsiirrot
JEL
E310 - Price Level; Inflation; Deflation, H220 - Taxation and Subsidies: Incidence, H320 - Fiscal Policies and Behavior of Economic Agents: Firm
Avainsanat
firm types, VAT incidence, price setting, restaurants
Kokoelmat
- VATT Working Papers [164]