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A Note on the Musgravian Transformation

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  • Chin W. Yang

    (Clarion University)

Abstract

It has been long recognized that an ad valorem tax rate on revenues (demand) has its counterpart in costs (supply). Such a one to one correspondence is referred to as the Musgravian transformation. The transformation is monotonic and nonlinear. However, the property of concavity of the tax revenue curve is not preserved under the transformation. Even if the tax revenue curve of the demand ad valorem tax is strictly concave everywhere, the tax revenue curve of the supply ad valorem tax is guaranteed to be concave only before its own revenue-maximizing tax rate.

Suggested Citation

  • Chin W. Yang, 1989. "A Note on the Musgravian Transformation," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 229-234, Jul-Sep.
    • Handle: RePEc:eej:eeconj:v:15:y:1989:i:3:p:229-234
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume15/V15N3P229_234.pdf
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    References listed on IDEAS

    as
    1. Caulton L. Irwin & Chin W. Yang, 1982. "Iteration and Sensitivity for a Spatial Equilibrium Problem with Linear Supply and Demand Functions," Operations Research, INFORMS, vol. 30(2), pages 319-335, April.
    2. Chin Wei Yang, 1981. "Stability of Appalachian Coal Shipments under Policy Variation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 111-128.
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    Cited by:

    1. Chin- Wei Yang & Dwight B. Means JR & George E. Moody, 1993. "Tax Rates and Total Tax Revenues From Local Property Taxes," Public Finance Review, , vol. 21(4), pages 355-377, October.
    2. Yang, Chin W. & Peng, Hsiao P. & Li, Jian F., 1996. "The optimum uniform and discriminatory taxes or tariffs of third-degree price discrimination," International Review of Economics & Finance, Elsevier, vol. 5(1), pages 77-84.
    3. Bishnu, Monisankar & Ghate, Chetan & Gopalakrishnan, Pawan, 2011. "Distortionary Taxes and Public Investment in a Model of Endogenous Investment Specific Technological Change," MPRA Paper 34111, University Library of Munich, Germany.
    4. Wen-Jung Liang & Kuang Cheng Andy Wang & Ping-Yao Chou, 2018. "The superiority among specific, demand ad valorem and cost ad valorem subsidy regimes," Journal of Economics, Springer, vol. 123(1), pages 1-21, January.

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