IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v24y1996i1p99-119.html
   My bibliography  Save this article

The Effects of Business Taxes On Output and Location of the Firm Under Uncertainty

Author

Listed:
  • Chiou-Nan Yeh

    (Alabama State University)

  • Sontachai Suwanakul

    (Alabama State University)

  • Chao-Cheng Mai

    (Academia Sinica and Alabama State University)

Abstract

In this article, a triangular production-location model is used to show that when output price is random, the imposition of business taxes (including lump-sum tax, profit tax, output tax, and input tax) can have significant effects on the optimal location and output of a firm attempting to maximize a von Neumann-Morgenstern utility function of profits. In addition, using the concept of differential incidence, the authors also made a comparison of the magnitudes of the impacts of these taxes on the output and location of the firm and indicates that the effects of these taxes differ according to the tax structure.

Suggested Citation

  • Chiou-Nan Yeh & Sontachai Suwanakul & Chao-Cheng Mai, 1996. "The Effects of Business Taxes On Output and Location of the Firm Under Uncertainty," Public Finance Review, , vol. 24(1), pages 99-119, January.
    • Handle: RePEc:sae:pubfin:v:24:y:1996:i:1:p:99-119
    DOI: 10.1177/109114219602400107
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114219602400107
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114219602400107?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Truett, Dale & Roberts, Blaine, 1973. "Classical Production Functions, Technical Optimality, and Scale Adjustments of the Firms," American Economic Review, American Economic Association, vol. 63(5), pages 975-982, December.
    2. Katz, Eliakim, 1984. "The optimal location of the competitive firm under price uncertainty," Journal of Urban Economics, Elsevier, vol. 16(1), pages 65-75, July.
    3. Miller, Stephen M. & Jensen, Oscar W., 1978. "Location and the theory of production : A review, summary and critique of recent contributions," Regional Science and Urban Economics, Elsevier, vol. 8(2), pages 117-128, May.
    4. Hsu, Song-ken & Mai, Chao-cheng, 1984. "Production location and random input price," Regional Science and Urban Economics, Elsevier, vol. 14(1), pages 45-62, February.
    5. Martinich, Joseph S. & Hurter, Arthur Jr., 1982. "Price uncertainty and the optimal production-location decision," Regional Science and Urban Economics, Elsevier, vol. 12(4), pages 509-528, November.
    6. Mai, Chao-cheng, 1981. "Optimum location and the theory of the firm under demand uncertainty," Regional Science and Urban Economics, Elsevier, vol. 11(4), pages 549-557, November.
    7. Khalili, Amir & Mathur, Vijay K. & Bodenhorn, Diran, 1974. "Location and the theory of production: A generalization," Journal of Economic Theory, Elsevier, vol. 9(4), pages 467-475, December.
    8. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    9. Mathur, Vijay K., 1983. "Location theory of the firm under price uncertainty," Regional Science and Urban Economics, Elsevier, vol. 13(3), pages 411-428, August.
    10. Hanoch, Giora, 1975. "The Elasticity of Scale and the Shape of Average Costs," American Economic Review, American Economic Association, vol. 65(3), pages 492-497, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chao-cheng Mai, 1984. "Demand Function and Location Theory of the Firm Under Price Uncertainty," Urban Studies, Urban Studies Journal Limited, vol. 21(4), pages 459-464, November.
    2. Isik, Murat, 2003. "Environmental Regulation And The Optimal Location Of The Firm Under Uncertainty," 2003 Annual meeting, July 27-30, Montreal, Canada 22066, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Zvi Drezner & Carlton Scott, 2010. "Optimizing the Location of a Production Firm," Networks and Spatial Economics, Springer, vol. 10(3), pages 411-425, September.
    4. Biing‐Shiunn Yang & Chao‐Cheng Mai, 2009. "Löschian competition under demand uncertainty," Papers in Regional Science, Wiley Blackwell, vol. 88(4), pages 765-784, November.
    5. Wall, Charles A. & Fisher, Brian S., 1988. "Supply Response and the Theory of Production and Profit Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-22, December.
    6. Ira Horowitz, 1997. "The Effects of Business Taxes on Output and Location of the Firm Under Uncertainty: Comment," Public Finance Review, , vol. 25(2), pages 254-258, March.
    7. Yeung-Nan Shieh, 1988. "Variable Transportation Rates and The Profit-Maximization Location Theory of The Firm," Urban Studies, Urban Studies Journal Limited, vol. 25(4), pages 341-347, August.
    8. Hong Hwang & Chao-Cheng Mai, 2004. "The Effects of Pollution Taxes on Urban Areas with an Endogenous Plant Location," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 57-65, September.
    9. Gershon Alperovich & Eliakim Katz, 1985. "Rent Gradient Under Uncertainty," Urban Studies, Urban Studies Journal Limited, vol. 22(3), pages 257-261, June.
    10. Lin-Ti Tan & Yan-Shu Lin, 2005. "Spatial Monopoly Pricing in a Stochastic Environment," IEAS Working Paper : academic research 05-A004, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    11. Ming Chen & Yeung-Nan Shieh, 2011. "Specific commodity taxes, output and location decision under free entry oligopoly," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 25-36, August.
    12. Thomas Eichner & Andreas Wagener, 2002. "Increases in Risk and the Welfare State," CESifo Working Paper Series 685, CESifo.
    13. Raushan Bokusheva & Lukáš Čechura & Subal C. Kumbhakar, 2023. "Estimating persistent and transient technical efficiency and their determinants in the presence of heterogeneity and endogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(2), pages 450-472, June.
    14. Tung Liu & Kui-Wai Li, 2008. "Revisiting Solow’s Decomposition of Economic and Productivity Growth," Working Papers 200805, Ball State University, Department of Economics, revised Dec 2008.
    15. Huang-Meier, Winifred & Freeman, Mark C., 2015. "Aggregate dividends and consumption smoothing," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 324-335.
    16. Park, Timothy A. & Antonovitz, Frances, 1991. "Econometric Tests Of Firm Decision Making Under Uncertainty: Optimal Output And Hedging Decisions," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271264, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Barrett, Christopher B., 1999. "The effects of real exchange rate depreciation on stochastic producer prices in low-income agriculture," Agricultural Economics, Blackwell, vol. 20(3), pages 215-230, May.
    18. Martín Egozcue & Xu Guo & Wing-Keung Wong, 2015. "Optimal output for the regret-averse competitive firm under price uncertainty," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 279-295, December.
    19. Burton, Diana M. & Love, H. Alan, 1996. "A Review of Alternative Expectations Regimes in Commodity Markets: Specification, Estimation, and Hypothesis Testing Using Structural Models," Agricultural and Resource Economics Review, Cambridge University Press, vol. 25(2), pages 213-231, October.
    20. Christian Gollier & James Hammitt & Nicolas Treich, 2013. "Risk and choice: A research saga," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 129-145, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:24:y:1996:i:1:p:99-119. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.