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Bling bling taxation and the fiscal virtues of hip hop

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  • Per Engström

Abstract

The paper extends Ng’s (1987) model of optimal taxation of diamond goods — goods that are valued solely for their costliness. We extend his findings by analyzing how other goods should be taxed in the presence of pure diamond goods; modified Ramsey rules are derived in a basic single-type model as well as in a two-type model with redistribution. One key finding, that may be surprising and rather provoking, is that close complements (hip hop music) to diamond goods (bling bling) should be heavily subsidized.
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Suggested Citation

  • Per Engström, 2011. "Bling bling taxation and the fiscal virtues of hip hop," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(1), pages 139-147, June.
    • Handle: RePEc:spr:sochwe:v:37:y:2011:i:1:p:139-147
    DOI: 10.1007/s00355-010-0485-2
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    References listed on IDEAS

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    1. Friedman, David D, 1988. "Diamonds are a Government's Best Friend: Burden-free Taxes on Goods Valued for their Values: Comment," American Economic Review, American Economic Association, vol. 78(1), pages 297-297, March.
    2. Ng, Yew-Kwang, 1989. "Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values: Reply," American Economic Review, American Economic Association, vol. 79(5), pages 1289-1290, December.
    3. Ng, Yew-Kwang, 1993. "Mixed diamond goods and anomalies in consumer theory : Upward-sloping compensated demand curves with unchanged diamondness," Mathematical Social Sciences, Elsevier, vol. 25(3), pages 287-293, May.
    4. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
    5. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    6. repec:bla:pacecr:v:9:y:2004:i:4:p:293-306 is not listed on IDEAS
    7. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
    8. Ng, Yew-Kwang, 1987. "Diamonds Are a Government's Best Friend: Burden-Free Taxes on Goods Valued for Their Values," American Economic Review, American Economic Association, vol. 77(1), pages 186-191, March.
    9. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-373, June.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to raise government revenue: tax bling bling, but subsidize hip hop?
      by Economic Logician in Economic Logic on 2010-09-16 19:30:00

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    Cited by:

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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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