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The Political Economy of Sin Taxes

Author

Listed:
  • Markus Haavio
  • Kaisa Kotakorpi

    (School of Management, University of Tampere)

Abstract

We analyse the determination of taxes on harmful goods when consumers have self-control problems. We show that under mild conditions, the socially optimal tax rate exceeds the average distortion caused by self-control problems. Further, we show that in most cases the tax rate chosen in political equilibrium is below the socially optimal level.

Suggested Citation

  • Markus Haavio & Kaisa Kotakorpi, 2007. "The Political Economy of Sin Taxes," Working Papers 0760, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:0760
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    Download full text from publisher

    File URL: http://urn.fi/urn:isbn:978-951-44-7129-2
    File Function: First version, 2007
    Download Restriction: no
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    Citations

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    Cited by:

    1. Haavio, Markus & Kotakorpi, Kaisa, 2011. "The political economy of sin taxes," European Economic Review, Elsevier, vol. 55(4), pages 575-594, May.

    More about this item

    Keywords

    excise taxation; voting; self-control;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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